Venezuelan crude becomes India’s third-largest oil source, now cheaper than Russian oil — But there’s a catch

According to Kpler, Venezuela has become India’s third-largest crude oil supplier in May, pushing past Saudi Arabia and the United States. Only Russia and the UAE are ahead. Separately, Bloomberg-cited Kpler data shows India is now the single largest buyer of Venezuelan crude globally, ahead of both China and the US.

Venezuelan crude is now structurally cheaper than Russian oil delivered to Indian ports. An unthinkable line three years ago, when Caracas was the world’s most sanctioned petrostate, and Moscow was offering Urals at $15–20 discounts to Brent just to find buyers. Today, the situation has flipped.

But even with this reversal, India’s dependence on Russian oil has not really changed. The real bottleneck was never the market. It was the refinery gate.

Why Venezuelan oil suddenly looks attractive 

The conflict involving the US, Israel and Iran disrupted oil flows through the Strait of Hormuz, one of the world’s most important shipping routes for crude. As tensions rose, Russian oil stopped being cheap.

Urals crude delivered to India, which was trading nearly $12 below Brent on February 27, jumped sharply and moved above Brent prices by mid-March. On March 19, the premium touched a record high of $6 above Brent. In simple terms, Russian oil that once gave India a discount suddenly became more expensive than benchmark crude.

The roughly $25 gap between Russia’s domestic export price and what arrives at Indian ports is the result of the costs and margins taken by traders, intermediaries and shipping networks navigating Western sanctions.

Into this gap has stepped an unlikely substitute: Venezuela.

Venezuelan crude is now trading at a $5–8 discount to Brent. But JP Morgan has pointed out something the price alone does not show. Venezuela cannot replace Russia at scale, no matter how cheap it is. The limit is not supply. The limit is refining capacity.

What changed in Venezuela’s Favour? 

In March 2026, India was bringing in about 343,000 barrels per day of Venezuelan crude, according to Kpler data cited by Bloomberg. That made India the biggest buyer of Venezuelan oil, ahead of both China and the United States. Kpler data shows that figure has risen to about 417,000 barrels per day in May.

Companies like Reliance Industries, Hindustan Petroleum and Indian Oil Corporation are among the key buyers. On the supply side, Venezuela’s state oil company PDVSA exported 1.23 million barrels per day of crude in April 2026, its highest level since 2018, according to shipping data and PDVSA documents compiled by Reuters. India’s cumulative Venezuelan crude intake since the start of 2026 had crossed at least six million barrels by April.

The pricing also made sense. Reliance reportedly bought Venezuelan crude for April delivery at about $6.50–7 below Brent from trader Vitol. The same crude was being offered to Chinese buyers at about $5 below Brent. Shipments to India jumped more than four times in March, overtaking even the United States as a destination.

A key structural enabler was Washington’s February 13 General Licence, which allowed Reliance to buy directly from PDVSA without going through trading-house intermediaries, sharply improving the economics of each cargo.

India cannot use Venezuelan oil on a large scale

This is where the story stops being about price. Venezuelan crude is not like most other oils India buys. It is heavy, sour and full of thick carbon compounds called asphaltenes. That makes it very difficult to refine.

Only a small number of refineries in India can actually process it properly. These include Reliance’s Jamnagar complex, Indian Oil Corporation’s Paradip refinery, Bharat Petroleum, and HPCL-Mittal’s Bathinda refinery. Most Indian refineries are not built for this kind of oil. So even if Venezuela produces more, India cannot simply absorb it all.

JP Morgan has also noted that even after sanctions eased, Venezuelan volumes cannot replace Russian crude fully. India still relies heavily on Russian oil, especially through non-sanctioned trading channels.

Russia still holds the advantage

Russian supply chains are already well established, and Indian refiners have built systems around them over the past few years. Even with pricing changes, Russian oil continues flowing into India through various non-sanctioned intermediaries. 

Russia’s Urals crude could be processed by a much wider set of Indian refineries without major changes. That is why, when Russian oil became cheap in 2022, India quickly scaled up imports to more than 40% of its total crude intake. That created a system built around compatibility, not just cost. 

Moving Venezuelan oil is not simple either 

Even when refineries can handle it, getting Venezuelan oil to India is not easy.

A recent shipment shows how complicated it can be. The tanker Ottoman Sincerity arrived at Sikka port carrying nearly one million barrels of Boscan crude. The oil had been transferred between ships near Aruba before reaching India.

This kind of ship-to-ship transfer is common for Venezuelan oil because its ports are limited and outdated. There are also financial and operational risks. Shipping companies are often hesitant because delays are frequent and oil quality can vary. On top of that, PDVSA often demands upfront payment, which increases risk for buyers and ties up large amounts of money. 

There is also a legacy India-Venezuela file that Rodriguez’s visit is likely to surface: ONGC Videsh has more than $500 million in dividends stuck in Venezuela since 2014, tied to its stake in the San Cristobal project. Any expanded India-Venezuela energy relationship will have to address that overhang.

The discount math only works as long as Washington keeps the door open. Trump’s 25% secondary tariff threat against buyers of Venezuelan oil was effectively lifted under the February interim US-India trade deal, which cut tariffs on Indian goods from 25% to 18% and removed the punitive levy. But that exemption is conditional. The broader US-India trade pact has a July 24 deadline; if it lapses, Indian exporters snap back to high tariffs and the political cover for Venezuelan purchases narrows again.

India is expected to import its highest level of Venezuelan oil in six years, according to Kpler data cited by Bloomberg. US Energy Secretary Chris Wright has said Venezuela could increase production by 30–40% by 2026, adding another 300,000–400,000 barrels per day, though that projection is uncertain given years of decline and underinvestment in Venezuela’s oil industry.