Refiners seek alternatives to Venezuelan oil post US tariffs

Indian refiners are now stuck with a problem after the US imposed 25% tariffs on countries buying crude oil from Venezuela, forcing them to look for alternative oil sources.

- Arunima Bharadwaj

Indian refiners are now stuck with a problem after the US imposed 25% tariffs on countries buying crude oil from Venezuela, forcing them to look for alternative oil sources. While oil imports from the south American country to India have not been conventionally high, these shipments increased last year after the US eased earlier sanctions imposed on the country.

Indian refiners are now likely to diversify their sources which may not come at a competitive price given Venezuelan oil was available at a discount compared to Brent, industry players say. Analysts, however, maintain that toning down of Venezuelan oil may not result in a major rejig of the oil trade flows as the quantum imported from Venezuela is limited.

"The impact is not likely to be huge as this (Venezuelan) crude was contributing a small percentage of total imports. Indian refiners can buy from alternative sources...," said Prashant Vashisht, senior vice president & co-group head, corporate ratings, Icra.

Pulkit Agarwal, head of India content (cross commodities) at S&P Global Commodity Insights, noted that Venezuela offers a different quality of heavy crude oil which, while difficult to process, is brought for competitive economic reasons. "While a straight replacement in terms of technical quality match is difficult, Indian refiners in the past have been nimble in changing their crude purchase mix," he said.