Russia has recently made a significant move by dispatching its initial shipment of Urals crude grade to Venezuela in half a decade. This decision comes amidst heightened U.S. sanctions on Moscow’s oil exports and disruptions in Red Sea shipping, prompting Russian authorities to explore alternative markets for their crude farther from home.
The supertanker Ligera has successfully reached near Amuay Bay off the Venezuelan coast, having loaded at least 1.7 million barrels of Urals crude through ship-to-ship transfers off the southern shores of Greece in the Mediterranean during January, as per tanker-tracking data compiled by Bloomberg.
This shipment marks the first recorded instance of Urals crude being sent to Venezuela in at least five years, according to Bloomberg’s data. Venezuela holds strategic importance for Russia, being considered a “friendly” nation alongside Iran and China. Venezuelan imports of such crudes have historically been utilized to dilute its heavy oil, rendering it suitable for export.
The rationale behind Russia’s decision to send the Urals cargo to Venezuela remains unclear. However, the move coincides with the United States’ intensified enforcement of sanctions against Russia, including threats to sanction financial institutions facilitating Russian exports.
Consequently, banks have become more cautious, leading to reported payment challenges for certain Indian customers of the Russian crude grade Sokol.
Venezuela emerges as one of the few new markets that Russia can explore, given the European Union and U.S. embargoes, along with the price limitations imposed on Russian oil, which have made buyers with U.S. business interests wary of dealing with Moscow’s crude and fuels.
Following the EU’s ban on Russian crude and fuel imports, Moscow has pivoted towards Asia, notably China and India, to market its crude oil. Deputy Prime Minister Alexander Novak disclosed that in 2023, China absorbed half of all Russian crude oil exports, with India closely trailing as the second-largest importer.
China now represents 45% to 50% of Russian oil and fuel exports, while India accounts for approximately 40%. This surge is particularly noteworthy for India, as Russia barely exported any oil to the subcontinent until 2022. Presently, Russia stands as India’s foremost oil supplier.
