India Becomes Biggest Buyer of Venezuelan Oil After US Sanctions

Oil price SURGE: Spike in price after US sanctions in Iran and Venezuela and OPEC cuts

State-owned Indian Oil Corp (IOC) has signed its first annual deal to buy usa oil, paying about $1.5 billion for 60,000 barrels a day in the year to March 2020 Reuters reported yesterday quoting the company's chairman.

The increased purchase from the US -based oil companies has come within months of re-impostion of economic sanctions against Iran-India's third-biggest supplier of oil. It had at that time bought about six million barrels of the USA crude oil under a single tender for delivery between November 2018 and January 2019.

To stop a build-up of inventories that could weigh on prices, the group of OPEC and non-OPEC producers known as OPEC+ began a new supply cut of 1.2 million bpd on January 1.

International Olympic Committee is the first Indian state refiner to buy USA oil under an annual contract, in a deal that will also help boost trade between New Delhi and Washington.

"We expect lots of volume going away from Venezuela, west Africa and Iran, so it makes sense to have guaranteed term supplies from the USA, where crude production is increasing", she said.

"Given a continuously uncertain economic picture, our already relatively bearish outlook for 2019 of below 1 million bpd in global oil demand growth may be subject to further downwards revisions", analysts at JBC Energy said. Bigger-than-expected cuts from OPEC and its de facto leader and largest producer Saudi Arabia helped push prices up.

India's overall share of crude oil imports from the North America region increased to 7 per cent in April-December period of 2018, as compared to share of 4.9 per cent in the same period in 2017. "South Korea is giving a freight rebate for non-Middle East crude imports", she added.

US energy companies last week increased the number of oil rigs looking for new supply by three to a total of 857, energy services firm Baker Hughes said in a report last Friday.

Looming over oil markets in the near term, meanwhile, is the rise in USA crude oil production of more than 2 million bpd in 2018, to a record 11.9 million bpd - with signs that US output will rise further.

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