‘India will now buy oil from Venezuela instead of Iran, deal finalised’, claims Donald Trump, government yet to respond

New Delhi: US President Doland Trump has made a big claim regarding India(BHARAT)’s oil purchase. He said that India(BHARAT) will now buy oil from Venezuela instead of Iran and that they have already finalized the deal. However, the India(BHARAT)n government has not yet reacted to this. Let’s find out how different Venezuelan oil is from Iranian oil.

Crude oil is classified based on its American Petroleum Institute (API) gravity and sulphur content. API gravity indicates whether the oil is light or heavy, while sulphur content determines whether the oil is sweet or sour. There is a significant difference between Venezuelan and Iranian oil.

Venezuelan Oil

Most of Venezuela’s oil reserves are in the Orinoco Belt, which stretches across the Orinoco River basin in the interior of the country. This is heavy and sour crude oil. It is dark, viscous, and acidic, with a high sulphur content. This oil is heavier than water, extremely sticky, and dirty. Venezuelan heavy crude has a high sulphur content, making it more acidic. This increases the risk of corrosion in storage tanks and pipelines.

To deal with this, refining and transport companies have to use special metals, ceramics, and other material in their equipment. The Venezuelan export grade crude is called Merey 16, which has an API gravity significantly lower than 20. The lower the API gravity, the heavier the oil and the more difficult it is to refine. Venezuelan crude typically sells at $8 to $15 per barrel less than Brent benchmark prices.

Iranian Oil

Iranian oil is quite the opposite. Iran has mostly older oil fields that produce light to medium-grade crude. This oil is easier to extract, cheaper to refine, and most refineries worldwide can easily process it. Iran primarily exports grades such as Iran Light and Iran Heavy, which have an API gravity of approximately 29 to 34.

Where does India(BHARAT)’s benefit lie?

India(BHARAT) previously imported oil from Venezuela. At one point, India(BHARAT) purchased nearly half of Venezuela’s total exports. However, trade declined sharply after US sanctions were tightened in the late 2010s. Now the question is, can India(BHARAT) actually benefit from Venezuelan oil?

BPCL has requested a discount of $10 to $12 per barrel on Venezuelan crude. This is because Venezuelan oil is more expensive to refine. Most of India(BHARAT)’s refineries are already configured for Iranian crude, which provides higher and better quality gasoline and diesel, lower transportation costs, and a stable supply. India(BHARAT)n refineries could profit from Venezuelan oil if a significant discount is offered, although there are also major challenges such as war, increased processing costs, and logistical expenses.