As crisis-stricken Venezuela is struggling with a steep decline in its oil production, India's average oil imports from the Latin American OPEC member have slumped over the last few months to their lowest level since 2012, Reuters reported on Tuesday, quoting industry and shipping sources.
Between November 2017 and February 2018, Indian crude oil imports from Venezuela averaged some 300,000 bpd, down by around 20 percent compared to the same period a year earlier, industry and shipping sources told Reuters on the condition of anonymity.
To compare, the five-year average rate of Indian oil imports from Venezuela is about 440,000 bpd, according to industry and shipping data.
Venezuela's crude oil production has been in freefall for months now as the country is hit by a severe economic crisis and hyperinflation. Years of mismanagement and lack of investments in the oil industry contribute to the massive drop in production, and in January Venezuela pumped 1.6 million bpd, down by 47,300 bpd compared to December 2017-the largest monthly decline in oil production among OPEC's 14 member states.
According to analysts, Venezuela must honor supply agreements with China and Russia that call for Venezuela to pay in oil for the credit its two only allies have extended, so little is left for shipments elsewhere.
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"Venezuela is obliged to supply barrels to China and Russia to pay back debts, so not too much is left for others, mainly India," Ehsan Ul-Haq, director of crude oil and refined products at consultancy Resource Economist, told Reuters.
When Iran was hit by Western sanctions over its nuclear program in 2012, India ramped up imports from Venezuela to compensate for the loss of barrels from Tehran, but after some of the sanctions were lifted in early 2016 and Iran returned to export oil, India has returned to buying more oil from Iran.
India imports 82.1 percent of the oil it consumes, and its biggest trade partner in energy imports is OPEC-some 85 percent of crude oil imports come from OPEC member states, with the Middle Eastern exporters dominant.
Iraq toppled Saudi Arabia to become India's largest crude oil supplier between April 2017 and January 2018, with Iran the third-biggest oil supplier, and Venezuela fourth, India's Oil Minister Dharmendra Pradhan said last week.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More