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India Pauses Venezuela Oil Purchases Fearing U.S. Sanctions Return

Indian state and private refiners have suspended purchases of crude from Venezuela as the U.S. sanctions waiver on Venezuela’s oil exports expires on April 18 and could lead to complications if not renewed, sources familiar with the purchases have told Bloomberg.

Private refiner Reliance Industries, which is India’s largest buyer of Venezuelan crude grade Merey, looks to avoid complications with cargoes if the U.S. were to re-impose the sanctions that were temporarily lifted for six months in the middle of October 2023. As the deadline for the waiver expiry nears, state refiner Indian Oil Corporation has also halted buying Venezuelan crude, according to Bloomberg’s sources.  

At the end of last year, the U.S. introduced a temporary sanctions relief from October 2023 to April 2024, which now allows the production, lifting, sale, and exportation of oil or gas from Venezuela, and the provision of related goods and services, as well as payment of invoices for goods or services related to oil or gas sector operations in Venezuela.

As a result, the top international oil trading houses are back in the business of trading with oil from Venezuela, and refiners in India returned at the end of last year to the market of purchasing Venezuela’s crude.

In December, India resumed imports of crude oil from Venezuela for the first purchases since 2020 after the U.S. lifted most of the sanctions on Venezuela’s oil industry in October.

For India, the world’s third-largest crude oil importer, Venezuelan oil is welcome as some refineries are designed to process the South American country’s heavy crude. The biggest refiners, including Reliance Industries, Indian Oil Corporation, and HPCL-Mittal Energy started securing crude cargoes from Venezuela as soon as the sanctions were lifted temporarily in October.  

Most refiners have resumed the purchases via intermediaries, sources familiar with the development told Reuters at the time. Reliance is also looking to discuss direct sales with Venezuela’s state-owned oil firm PDVSA, according to Reuters’ sources.  

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on March 26 2024 said:
    What kind of a geopolitical game is India playing? The world's third-largest economy based on purchasing power parity (PPP) which prides itself on not recognizing Western sanctions but only UN's and which has been defying these sanctions and buying crude oil from Russia, Iran and Venezuela is suddenly becoming coy about a possible return of US sanctions on Venezuela.

    Is it now using the sanctions as an excuse to demand special discounts from Venezuela, Iran and Russia?

    With a tightening global oil market and rising prices, it may soon come begging for crude oil imports from these three countries.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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