India's oil map is again shifting, and this time, Venezuela is making a quick comeback.

Kpler estimates deliveries of Venezuelan crude to India will increase to about 465,000 bpd in October, up from 196,000 bpd in September. Those cargoes will be India's biggest since December 2019, if they are delivered on time.

The numbers are not insignificant, since almost all the current Venezuelan cargoes indicate that they are bound for India via Sikka. Sikka hosts the giant Jamnagar oil refinery of Reliance Industries, and the story has a clear commercial centre: the opportunity that Reliance is exploiting is the result of a remarkable shift in the global oil economy.

The hallmark of India's energy policy since Ukraine was Russian crude. With Russia's Urals being sold at discount, Indian refiners were able to get cheap feedstock whereas European countries gradually pulled out of Russian energy. India's response to those purchases was simple: A nation that imports the majority of its crude oil cannot be at the mercy of a nation's geopolitical agenda for energy security.

This reasoning is not gone. The economics are different.

Russia accounted for ~35 per cent of India's crude imports in September, down from ~56 per cent in July. Production has dropped to about 1.88 million bpd in September from 2.09 million bpd in August and was around 2.83 million bpd back in July.

Meanwhile, Russian Urals has become more expensive, and Washington's stiffer sanctions framework has enhanced the commercial risk of Russian buying. Hence, India needs to expand its choices, and not rely on a single discounted supplier.

That equation seems to work extremely well in the case of Venezuela.

It is crude that is heavy and sulphurous, and is more difficult to refine than many other, lighter, crudes. That is a disadvantage, though, for the more sophisticated refineries. Reliance's Jamnagar complex is equipped and configured to handle challenging barrels of heavy sour oil and is capable of upgrading them to valuable fuel and petrochemical products.

The lowest crude can't always be the lowest priced crude in the headlines when it comes to refining. It is the "landed cost" (what the crude costs after it gets to the American shore) and the "refinery yield" (how much oil comes out of each barrel) and the "processing expense and value" of the various products recovered from each barrel that will matter. A refinery that can accept discounted heavy crude will have a competitive edge over simpler refineries.

That becomes crucial for Jamnagar.

Indian oil can also be a good negotiating chip for Venezuela, which is becoming more and more important. Russian crude is not the only barrel on offer at a deep discount. Gulf supplies have bounced back strongly, Venezuelan oil has come back and American barrels are yet another part of India's diversified basket.

September was already a testament to the rapid changes in sourcing. India and supplies from West Asia both surged in imports, with the former taking in over five million barrels per day of crude. Iraq, Saudi Arabia, the UAE and Kuwait made gains among the Russians.

This is the real deal, in regards to energy security. It's not a new dependency syndrome, Middle East dependency replaced by Russian dependency and then Russian dependency replaced by Venezuelian dependency. It's keeping several competing suppliers that no producer, government or geopolitical grouping can choose India's options.

But, there's a very important Venezuelan limitation.

Distance costs money. Shipments from the Gulf are not as far as a tanker from Venezuela to India. Already, freight rates have been an issue. Total oil exports from Venezuela dropped about 9 per cent in September to about 1.08 million bpd as buyers had to pay even bigger discounts due to high shipping costs. Venezuela's production infrastructure is also still damaged due to years of under investment and sanctions. Reconstructing it to become a dependable, worldwide provider will take years of investment and tens of billions of dollars.

Just 465,000 barrels per day cannot be assumed to be the start of a long-term Indian preference for Venezuela's oil. Kpler has stated that if vessels are delayed due to the end of the month, actual deliveries may be closer to 350,000 bpd in October.

Even that level, the message is clear.

Oil markets are increasingly ‘business-as-usual'. Venezuela must find buyers and investors. Russia has to save market share. Gulf producers seek to make Asian customers come back. The U.S. seeks India's de-dependence on Russian energy. India, on the other hand, requires cheap oil for a country with a large economy where the price of energy is a macroeconomic concern.

An every day rise in crude prices eventually makes its mark in the Indian economy. It impacts import bill, rupee, inflation, transportation, aviation, chemicals, plastics, fertilisers and corporate margins. Even a few dollars off each barrel saved can mean billions of dollars saved over a year for an economy that imports millions of barrels daily.

This is the reason why India should oppose the politicisation of each tanker move.

From all this, it is clear that new Delhi didn't purchase Russian oil because it had suddenly found a new political friend in Moscow, nor Venezuelan crude because it has found a new friend in the Indian seat of government. When the barrels are attractive to the Indian refiners with regards to their quality, price, freight, and conforming to the sanctions and the economics of refining, they purchase the barrels.

That's the bigger change, actually, from Russia to Venezuela. It's about dependency to optionality.

India is becoming adept at buying oil from a divided energy market: Russian oil when the price is right for them, oil from the Gulf when supplies improve, heavy crude from Venezuela when prices drop, and oil from the United States when market conditions make it profitable.

Flexibility in the face of wars, sanctions, shipping disruptions and trade negotiations, which can suddenly shift oil flows, could prove to be more valuable than any individual discount in a world where these crises can and do happen.