Indian oil imports from Venezuela have fallen to their lowest levels in over half a decade, as a severe economic and political crisis hits crude output in the South American OPEC member.
The oil imports from the South American country dropped about 20 per cent between November, 2017 and February, 2018, from the same period a year earlier.
India imported oil from the OPEC member around 300,000 barrels per day (bpd) between the mentioned period, according to the shipping and industry data.
Venezuela’s oil production plunged to the lowest in decades last year, with the country racked by quadruple-digit inflation, a lack of hard currency and a crippling recession, reports Reuters.
The five-year average of the oil producer’s crude oil to India is around 440,000 bpd, the shipping and industry data showed.
India’s oil supplies continue to be dominated by Middle East members from the Organization of Petroleum Exporting Countries (OPEC), with Iraq and Saudi Arabia prominent.
Key for Venezuela’s drop-off in shipments to India are supply obligations to other countries which, amid its overall declining output, leave fewer cargoes available for sale elsewhere.
“Venezuela is obliged to supply barrels to China and Russia to pay back debts, so not too much is left for others, mainly India,” a prominent economist said.
The sharp Venezuelan declines to India mark a turn-around of a previous trend.
Venezuelan oil shipments to India surged from May, 2012, when supplies from Iran hit insurance and banking hurdles caused by western sanctions against Tehran’s nuclear programme.
However, New Delhi boosted purchases from Tehran after the lifting of sanctions in 2016, while a destructive cocktail of insufficient investments, payment delays to suppliers, potential US sanctions and a brain drain have hammered Venezuela’s oil industry.
“Why should India buy oil from a country which is too far (away)?... Plenty of oil is easily available from nearby nations like Iraq and Iran,” the economist, Ehsan Ul-Haq, director of crude oil and refined products at consultancy Resource Economist, said.