Reliance’s Venezuelan oil purchase costs slightly more but reduces supply risk
Reliance Buys Venezuelan Oil Why Paying More May Help India
Reliance Industries recently bought about 2 million barrels of Venezuelan oil after nearly a year without such imports. The cargo comes at a smaller discount than Russian oil, meaning India is knowingly paying more per barrel than it has been used to since the Ukraine war reshaped global energy trade. For a country that prides itself on securing the cheapest fuel possible, the obvious question arises: why voluntarily choose a costlier barrel?
The difference is not dramatic. Russian crude typically sells at roughly $15 below Brent while Venezuelan heavy crude trades closer to a $7 discount. That gap of about $8 per barrel sounds large until translated into consumer reality. A barrel contains 159 litres, which means the additional cost is around ₹3.5 to ₹4 per litre of crude. But crude forms only about 35 to 40 percent of India’s pump price due to excise duties and VAT. The final retail impact comes to roughly ₹1.5 to ₹2 per litre.
In practice, even this small change rarely reaches consumers directly. Oil marketing companies routinely adjust refining and marketing margins to smooth price volatility. This is why petrol prices in India do not fluctuate daily with global crude movements. The public narrative that switching suppliers will immediately hurt consumers simply does not match how the pricing structure works.
The real reason lies in risk. India’s heavy reliance on discounted Russian crude since 2022 has been economically beneficial but strategically fragile. Shipping insurance restrictions, payment mechanisms, and geopolitical pressure can change overnight. Overdependence on a single supplier creates vulnerability not in normal times but during crises, which is exactly when energy becomes most critical.
Refinery economics also matters. Complex refineries like Jamnagar are designed to process heavy and difficult crudes efficiently. Venezuelan heavy crude produces strong refining margins and valuable products, allowing refiners to recover much of the higher purchase cost. The headline price of oil is therefore not the same as profitability.
Diversification also strengthens bargaining power. When India buys only one discounted crude, the seller holds leverage. When India maintains multiple supply options, every exporter must compete to retain market share. Paying slightly more for some cargoes can therefore reduce the long-term price of all cargoes.
This decision is not without drawbacks. The import bill marginally increases, and politically it appears as abandoning the cheapest option. Venezuelan oil trade also carries sanction-related uncertainties. But these risks are limited compared to the danger of a sudden supply disruption in an over-concentrated import basket.
India is not replacing Russian oil. It is preventing dependence from turning into vulnerability. The small premium acts as insurance, not extravagance. Paying a little more today helps ensure fuel availability tomorrow, and that stability matters far more than chasing the absolute cheapest barrel.
