Trump's Strategic Oil Game Unfolds
Donald Trump's oil game plan is seemingly becoming effective. Recently, following a strategic move in Venezuela and the subsequent detention of President Maduro, the U.S. President asserted control over Venezuela's oil reserves. Consequently, negotiations for Venezuelan oil have commenced under Trump's influence. Indian oil firms have secured a deal for 2 million barrels of crude. Reports suggest that this procurement was solely initiated by two state-owned Indian refineries, with oil expected to arrive by April.
India Buys Venezuelan Oil under U.S. Control
With the U.S. seizing control over Venezuelan oil reserves, a significant deal involving 2 million barrels was struck, facilitated by Indian state oil companies. According to Reuters sources, Indian refineries are turning to Venezuela to reassess their supply strategies. Jointly, Indian Oil Corp (IOCL) and Hindustan Petroleum Corp (HPCL) have purchased 2 million barrels of Merey crude, scheduled for delivery in April.
Diversification in Crude Oil Imports
The shipment of Venezuelan oil will be transported by a single Very Large Crude Carrier (VLCC), with Indian Oil Corp receiving approximately 1.5 million barrels and Hindustan Petroleum Corp acquiring around 0.5 million barrels. It is slated to arrive on India's east coast by April. As reported, the seller is commodity trader Trafigura. Due to confidentiality agreements, Indian companies typically refrain from commenting on spot tenders, and Trafigura has declined comment on the deal as well.
HPCL's Maiden Purchase of Venezuelan Crude
According to data gathered by Reuters, India's largest refiner IOC has processed Venezuelan oil previously, but this marks HPCL's initial purchase of Venezuelan crude. This oil agreement indicates a broader effort by Indian refiners to diversify crude oil imports as they aim to reduce reliance on Russian oil. It's also seen as a move to advance the India-U.S. Trade Deal, an initiative supporting economic engagement between the two nations.
Reliance's Strategic Pricing
One source revealed that the pricing of the Merey cargo was based on Dubai benchmarks, similar to the rates at which Reliance Industries purchased Venezuelan oil from trader Vitol. According to sources, Reliance, operating the world's largest refining complex, secured 2 million barrels of Venezuelan crude at a discount of approximately $6.50-$7 per barrel against ICE Brent for April delivery.
Trade Deals and Oil Acquisition
Last month, following the arrest of President Nicolas Maduro and U.S. military interventions in Venezuela, the Trump administration granted American licenses to Vitol and Trafigura to sell Venezuelan oil. This procurement by Indian state refineries aligns with the recently agreed-upon India-U.S. Trade Deal, pending official announcement. Both India and the U.S. have outlined a framework under the trade deal focusing on tariff reduction and strengthening economic relations, aiming to finalize the agreement by March.
Notably, the joint statement regarding the framework did not specifically mention Russian oil, but President Donald Trump announced the cancellation of an extra 25 percent tariff on Indian goods tied to Russian oil purchases, stating that India consented to halt Russian oil imports, either directly or indirectly.
