US secretary of state Marco Rubio said in Mumbai on Tuesday he would encourage Reliance Industries, which runs the Jamnagar refining complex in Gujarat, to refine more Venezuelan crude.
Behind the request is a complex set of immediate circumstances – particularly, multiple theatres of conflict that have driven oil prices, and in turn pump rates around the world, to uncomfortable levels. But a more fundamental factor is how crude oil, once nicknamed black gold, varies from one oilfield to the next, and how refineries that turn it into fuel are set up to handle a specific range and type of it.
The oil range
Crude oil comes in varieties. Some of it is thin and runny. Merey, Venezuela’s main export blend, is thick and slow-moving, more like treacle than diesel. The heaviest oil from the Orinoco belt in central Venezuela is denser than water.
The industry measures density on a scale called API gravity, named after the American Petroleum Institute, an industry body. Water scores 10 on this scale. Oil above 10 floats on water, and oil below it sinks.
The US Geological Survey (USGS) counts oil scoring 22 or less as heavy, and anything below 10 as extra-heavy.
The second measure is sulphur. Low-sulphur crude is called sweet, and high-sulphur crude is called sour. Refineries need dedicated units to strip the sulphur out.
Merey scores between 15 and 18 on the API scale and carries 2% to 3% sulphur, which puts it firmly among the heavy, sour grades.
{{/usCountry}}Merey scores between 15 and 18 on the API scale and carries 2% to 3% sulphur, which puts it firmly among the heavy, sour grades.
{{/usCountry}}The best-known price benchmarks are lighter. Brent, from the North Sea, and America’s West Texas Intermediate are light and sweet. Dubai and Oman, the Gulf’s markers, are medium and sour.
The USGS says heavy oil is what remains of oil that was once light, after bacteria, water and evaporation stripped away its lighter parts. It also carries significant amounts of sulphur, nitrogen and heavy metals.
Lighter, lower-sulphur crude sells at a premium, and far simpler refineries can process it, according to the US Energy Information Administration (EIA), the US energy department’s statistics agency.
Venezuela has more of the thickest kind than anywhere else world over. The Orinoco belt holds about 90% of the world’s extra-heavy oil in the ground, the USGS estimated in 2003. Oil that thick cannot be shipped as it comes out of the ground. It has to be thinned with lighter oil, or partly processed in plants near the field called upgraders. In January, the first US cargo of naphtha, a light oil used for that thinning, was loaded for Venezuela.
The role of refineries
A refinery’s job is to turn crude into fuels such as petrol and diesel. The first step is in a distillation column, a tall tower found in every refinery, which heats crude and splits it into lighter and heavier fractions according to their boiling points.
For light, sweet crude, that step does much of the work, so a refinery with little else equipment can do well on it. Heavy crude is harder. Run through the distillation column, it leaves a lot of thick, low-value residue.
To deal with that residue, complex refineries add secondary equipment that upgrades low-value products, like residual fuel oil, into high-value ones, like distillates such as diesel. Three kinds of unit do most of this work. A coker uses heat to break the heaviest residue into lighter products such as diesel and petrol. Hydrocrackers do similar work with hydrogen, and desulphurisation units remove the sulphur.
Venezuela’s heaviest oil needs this kind of treatment. The USGS says the heaviest grades, extra-heavy oil and bitumen, “must usually be upgraded by reducing their carbon content or adding hydrogen” before an ordinary refinery can use them.
This equipment is expensive too, and the industry ranks refineries by how much of it they have. In the 1960s, WL Nelson, who wrote on refining for the trade publication Oil & Gas Journal, devised a way to score all this kit. His index gives the distillation column a value of 1 and rates every other unit by what it costs to build relative to that column. A coker scores 6. The more such equipment a refinery has, the higher its score.
Reliance says Jamnagar scores 21.1 and has processed more than 216 grades of crude.
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Refineries were built for oil they expected
Refiners design their plants around the crude they expect to buy.
In 2015, the EIA described refineries on the US Gulf Coast, the stretch of coastline along the Gulf of Mexico that then held more than half of America’s refining capacity, as “specifically designed to handle heavy Venezuelan crude”.
Those refineries were once Venezuela’s biggest customers. Before US sanctions in 2019, several large Gulf Coast refineries processed about 800,000 barrels a day of Venezuelan oil, according to US government data cited by Reuters.
Venezuela also built big refineries at home. Its Paraguaná refining complex has room for 955,000 barrels a day, but the EIA reported in 2015 that it was running at about half that.
In India, refiners developed around crude from West Asia, and more recently, Russian crude, as its share rose over the years. Russia supplied about 2% of India's oil imports in 2021-22 and more than 30% in 2023.
Reliance’s two Jamnagar refineries account for about a quarter of India's refining capacity, according to data from the Petroleum Planning and Analysis Cell (PPAC), the oil ministry’s data office.
Some state-run plants can handle Venezuelan oil too. Kpler, a commodity-data firm, says the Bina (Madhya Pradesh) and Kochi (Keralam) refineries of state-run Bharat Petroleum (BPCL) and the Visakhapatnam (Andhra Pradesh) refinery of Hindustan Petroleum (HPCL) can also process heavy grades such as Merey.
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The supply disruptions
Over the past 15 months, a string of events has cut refiners off from the crude their plants were built to run, or made it far more expensive. Sanctions disrupted Venezuelan and Russian supply, and then a war in West Asia shut the main sea route out of the Gulf. And geopolitics did the rest.
A key jolt came from Venezuela. In July 2025, refineries on the US Gulf Coast did not receive any Venezuelan crude, after Chevron’s US licence to operate in the South American country lapsed at the end of May. A new licence followed in late July.
By November last year, US sanctions on Rosneft and Lukoil, two major Russian oil companies, had Indian refiners rushing to buy Russian cargoes before the cut-off took effect.
Venezuela’s situation changed again in January this year, when the American forces went into Venezuela and captured its leader Nicolas Maduro.
Venezuelan output has risen since. Washington then struck agreements with Vitol and Trafigura, two commodity traders, to market Venezuelan oil that had been left stranded.
Then came the war in West Asia. US and Israeli strikes on Iran began on February 28, and by early March, tanker traffic through the Strait of Hormuz had almost stopped. Hormuz, the narrow channel between Iran and Oman, is the only sea route out of the Persian Gulf, and Iraq, Kuwait, Qatar and Bahrain have no pipelines to get around it.
With Gulf crude stuck, plenty of refiners had to make do with crude their plants were not built for.
The International Energy Agency (IEA), the Paris-based body that tracks oil markets for its member countries, said in October that refiners had been forced onto “crude grades that are suboptimal for their configurations”, and that record freight and crude costs had “crushed margins in Europe and Asia”.
The disruption also reshaped prices for different grades. Medium, sour Gulf grades such as Dubai and Oman strengthened after the war began, and the discount on Venezuela’s Merey narrowed to about $10 a barrel below Brent, from $12 to $15 in late December and January, Kpler said. In other words, heavy Venezuelan oil became less of a bargain.
The US felt the squeeze too. Short of Gulf crude, and with less coming from Mexico and Saudi Arabia, US Gulf Coast refiners turned partly to Venezuela, which became the second-largest supplier of US crude imports in May, according to EIA data cited by Kpler. By around June, it accounted for 10% of US crude imports, against 2% a year earlier.
India’s purchases shifted as well. Russian oil fell from 51% of India’s oil imports in July to 44% in August.
The shortages have also hit diesel, the fuel that powers most trucks and much of industry. Ukrainian drone strikes on Russian refineries, together with the Gulf losses, cut diesel exports from Russia and West Asia by 1.3 million barrels a day in September compared with a year earlier, the IEA said. Flows through Hormuz picked up in September, but the agency called the recovery “fragile”.
Why Venezuelan oil, and why India
Venezuela is now pumping more oil, which needs buyers with refineries complex enough to process it. India has several such refineries, and Washington has reasons of its own to want them used.
Rubio made the first point himself. “We will talk about (refining more Venezuelan crude) tomorrow with Reliance...They have done so in the past, and I think as more and more of Venezuelan oil comes online, that is something they can do," Rubio told reporters on Tuesday.
The list of buyers has also changed. China, once the biggest buyer of Venezuelan crude when Maduro was in power, pulled back after the US moved to control Venezuela’s oil sales. By April this year, Indian refiners were also emerging as its largest buyers, Bloomberg reported.
The US could also take more of Venezuelan oil for itself, but at a cost to a neighbour. US Gulf Coast refineries could absorb most of Venezuela’s crude, Reuters reported in January, largely by pushing out other heavy crude, Canadian above all. That would hurt Canadian producers as it exported about 90% of its crude to the US. Ties between the two countries have frayed more recently.
Separately, Indian refiners moved early to procure Venezuelan crude. By February, Reliance, state-run Indian Oil (IOC), HPCL and BPCL had lined up about 8 million barrels of Venezuelan crude for April delivery, at about $6 to $6.50 a barrel below Brent, according to Kpler.
Those flows are now picking up. Kpler projected India’s Venezuelan imports in October at about 465,000 barrels a day if scheduled cargoes come in on time, the highest since December 2019, though one of its analysts expected closer to 350,000, Bloomberg reported.
Washington also wants fuel prices down ahead of the November midterm elections, which are being perceived as a poll on President Donald Trump’s performance at home. Last week, the US signed a deal with Russia to import diesel in a bid to cut fuel prices at home.
More refining anywhere could help with that. Oil is priced globally, so diesel from a refinery in Gujarat adds to world supply just as diesel from Texas does. In July, Reliance raised diesel exports from Jamnagar to Europe and Brazil, Reuters reported.
Taken together, Washington appears to want buyers beyond the US for Venezuela’s growing output, and India is one of them.
Rubio also has a longer-term idea. He said the possibility of Reliance producing oil in Venezuela, where it is not active, had been discussed before and would come up again. “We are going to go see what the holdup is and what opportunities exist... this is a company that has had a presence in Venezuela in the past, and whose refining capabilities are substantial,” he said.
Rubio’s trip to India is tied to trade. It follows US President Donald Trump's decision last week to waive tariffs that could have punished India for buying Russian oil. Rubio said the administration was entering a 60-day review of which new tariffs, if any, to impose. A comprehensive trade deal was close, he said.