India May Save $3 Billion Annually By Importing Venezuelan Oil: SBI Report

India plans to start importing Venezuelan crude oil as a necessity for its international trade activities. The result of this decision would lead to a reduction of India’s yearly oil import expenses by approximately three billion dollars. The recent SBI Research report provided this information.

Cost Advantage of Venezuelan Crude

  • The report explains that Venezuelan crude oil currently sells at approximately 51 dollars for every barrel. The financial outcome becomes positive for India when it receives a price reduction between 10 to 12 dollars per barrel. The total savings maintain their substantial value even after deducting transportation expenses and all related costs.
  • The research from SBI shows that shifting some oil purchases from Russia to Venezuela operation to lower the total import costs. The report shows that the discounted price now serves as the main element which enables potential savings to occur.

Transportation and Other Challenges

  • The report provides information about multiple elements which affect cost development. Venezuela exists at a great distance from India. The duration of oil deliveries from Venezuela requires almost five times the time needed for deliveries from West Asia. The duration for travel requires about double the time needed for Russian oil imports. The longer distance requires higher expenses for transportation and insurance.
  • The expenses which arise from these elements will create additional pressure on the total expenses which result from Venezuelan oil logistics operations. The experts warn that organizations need to determine all operational costs before they proceed with permanent operational changes.

Uncertainty Around Russian Oil Discounts

  • Experts predict that the availability of Russian oil discounts will end within the next few years. The price benefit will vanish if the Russia-Ukraine conflict experiences any form of resolution. This uncertainty has increased India’s interest in exploring alternative suppliers like Venezuela.
  • The report indicates that Venezuelan oil will provide India with long-term financial advantages despite the existing logistical difficulties.