India May Cut Fuel Import Bill by USD 3 Billion: SBI Report

New Delhi [India], February 4 :
India could reduce its annual fuel import bill by up to USD 3 billion by shifting part of its crude oil imports from Russia to Venezuelan heavy crude, according to a report by State Bank of India (SBI) Research.

The report said that increasing imports of Venezuelan crude could offer significant cost savings. This remains possible even after factoring in logistics, shipping, and insurance costs.

Discount Key to Cost Savings

SBI Research noted that a discount of USD 10–12 per barrel on Venezuelan crude would make the switch economically viable for India.

At present, Venezuelan heavy crude trades at around USD 51 per barrel, based on oil price data cited in the report.

According to SBI, such pricing could offset the higher transportation costs involved in sourcing crude from Venezuela.

Logistics and Distance Remain Key Factors

The report highlighted that Venezuela lies much farther from India than traditional suppliers.

Shipping distances from Venezuela are nearly five times longer than the Middle East and about twice as long as Russia. This adds to the total landed cost of crude oil.

However, SBI said that competitive pricing could still balance these additional expenses.

Refining Capacity Plays Crucial Role

SBI Research also stressed the importance of India’s domestic refining capabilities.

Indian refineries can process heavy crude, but blending different grades may involve technical and operational costs.

The report said India’s strong refining infrastructure supports flexibility in crude sourcing.

Scenario Analysis Shows Potential Savings

Using a “brute force scenario,” SBI modelled a full shift from Russian crude to Venezuelan heavy crude.

The analysis preserved historical import trends. Under favourable discount conditions, it showed potential savings of nearly USD 3 billion annually.

Russian Crude Discounts May Narrow

The report cautioned that easing geopolitical tensions in Ukraine could reduce discounts on Russian crude.

If that happens, the cost advantage of Venezuelan crude may narrow.

Still, SBI maintained that a USD 10–12 per barrel discount would make sourcing from either supplier economically neutral.

Flexible Import Strategy Likely

SBI said India’s future crude import mix will involve multiple combinations.

These will include Russian, Venezuelan, Middle Eastern, and other crude grades. Decisions will depend on market prices, logistics, and refinery needs.

The report concluded that while Venezuelan crude offers strong savings potential, India’s final import strategy will remain dynamic and market-driven.