Data shows Venezuelan oil costs more than Russian crude while India–US trade held steady,
SBI’s Venezuelan Oil Report Does Not Match Trade and Price Data
India’s crude oil sourcing strategy became a public talking point after statements indicating a possible shift towards Venezuelan oil. Almost immediately, a research note from the State Bank of India argued that such a move could save India nearly $3 billion annually. Given the size of India’s oil import bill and the political sensitivity of altering Russian oil purchases, this claim naturally drew attention. Any assertion of savings at this scale deserves rigorous scrutiny, because even small errors in oil economics translate into billions of dollars for the exchequer.
SBI’s analysis appears designed to make a politically sensitive decision look economically painless, but when tested against actual trade and oil-price data, the justification does not hold.
To understand why, it is important to first clarify what SBI claims. The report suggests that replacing a portion of Russian crude with Venezuelan crude could lower India’s overall oil import bill. Implicitly, it also hints that such savings could cushion the impact of trade pressures, particularly US tariffs on Indian exports. The $3 billion figure is presented as a macro-level benefit, creating the impression that India would be financially better off even if Venezuelan oil were logistically more complex.
The problem begins with the trade-side assumption. If oil savings are meant to offset tariff-related losses, there must first be a measurable loss in India–US trade. The data does not support that premise. Before the tariff episode, India’s exports to the United States stood at roughly $79 billion annually. During and after the tariff period, while certain sectors faced pricing pressure, aggregate exports to the US remained resilient. Monthly and quarterly trade figures show no sharp collapse in overall export value. In other words, India did not experience a macro-level reduction in trade volumes that would justify a compensatory strategy through oil sourcing.
This distinction is critical. Tariffs can hurt exporters through margin compression without necessarily reducing total trade value. That is a microeconomic pain felt by firms, not a macroeconomic loss to the country. From a national accounting perspective, the relevant number is the difference between exports before tariffs and exports after tariffs. That difference, based on available data, is small. There is no evidence of a multi-billion-dollar export shortfall that needs to be “recovered” through cheaper oil.
With that context established, the oil economics can be examined cleanly. At market-linked prices, Russian Urals crude supplied to India has been trading at roughly $10 per barrel below Brent. Venezuelan heavy crude, by contrast, typically trades closer to Brent minus $6 per barrel. On crude price alone, Venezuelan oil is therefore about $4 per barrel more expensive than Russian oil.
Price, however, is only part of the delivered cost. Logistics matter. Russian crude reaches India over shorter routes and has already been integrated into Indian refining systems. Venezuelan crude must travel significantly longer distances, increasing freight and insurance costs. Conservative estimates place this additional logistics burden at $2 to $4 per barrel. When this is added to the crude price gap, the delivered cost of Venezuelan oil ends up $6 to $8 per barrel higher than Russian oil.
These per-barrel differences scale rapidly at national import volumes. If India were to switch just 1 million barrels per day from Russian to Venezuelan crude, the annual volume would be 365 million barrels. At a $6 per barrel penalty, the additional annual cost would be about $2.2 billion. At an $8 per barrel penalty, it would rise to nearly $2.9 billion. This is not a theoretical loss. It is a direct increase in dollar outflow for oil imports.
Now compare this oil penalty with the supposed trade benefit. The observed reduction in India–US trade value is close to zero at the aggregate level. Even under aggressive assumptions of trade impact, there is no clear evidence of losses exceeding $2–3 billion annually. In practical terms, the oil penalty alone can match or exceed any plausible trade recovery, leaving India worse off overall.
This is where the $3 billion “saving” claim collapses. For SBI’s number to materialise, at least one of the following would need to be true: Russian oil discounts would have to disappear in the near term; Venezuelan oil would need to be cheaper than Russian oil on a delivered basis; or India would need to be suffering a large, measurable export loss due to tariffs. None of these conditions are currently supported by data. Russian discounts remain structural due to sanctions. Venezuelan oil is more expensive at market rates. And trade volumes have proven resilient.
The result is that the SBI report does not describe an economic gain. It describes a narrative that reassures readers that a policy shift will not hurt. That may be politically comforting, but it is not the same as being economically correct. When actual prices, volumes, and trade outcomes are laid out transparently, the arithmetic points in only one direction.
Energy policy decisions of this scale must be grounded in delivered cost and national interest. When the numbers show a higher import bill and no offsetting trade benefit, claiming savings misleads more than it informs. In this case, the data does not just weaken SBI’s conclusion. It directly contradicts it.
