Trump’s tariff threat puts India’s Venezuelan oil imports at risk

In a move that could significantly impact India’s crude oil import strategy, US President Donald Trump has announced a 25% “secondary tariff” on countries purchasing Venezuelan oil, including India and China.

The tariff, set to take effect from April 2, adds another layer of geopolitical complexity to global energy markets and threatens India’s efforts to diversify its oil imports.

Trump made the announcement late Monday via social media, stating, “Venezuela has been very hostile to the US and the freedoms we espouse. Therefore, any country that purchases oil and/or gas from Venezuela must pay a tariff of 25% to the US on any trade they conduct with our country. All documentation will be signed and registered, and the tariff will take effect on April 2.”

According to an executive order published on March 24, the tariffs will remain in place for a year following the last purchase of Venezuelan crude by a country unless an early removal is approved by the US Commerce Secretary. The Financial Times reported that these tariffs will be imposed in addition to any existing levies.

India’s exposure and growing dependence on Venezuelan crude

India resumed crude oil imports from Venezuela in December 2023, three years after the US eased sanctions on the South American nation. Since then, it has emerged as the largest buyer of Venezuelan crude, with private-sector refiners Reliance Industries Ltd (RIL) and Nayara Energy (NEL) driving purchases.

Shipping and tracking data reveal that Venezuela shipped nearly 191,600 barrels per day (bpd) of crude to India in December, increasing to over 254,000 bpd in January. This accounted for nearly half of Venezuela’s total oil exports of approximately 557,000 bpd that month. Before this, the last Venezuelan crude dispatch to India occurred in September 2020, with the final deliveries reaching Indian ports in November of that year.

Impact on India’s energy security and oil prices

The looming US tariffs could further tighten global crude supply, potentially driving up prices —a major concern for India, which imports over 85% of its oil requirements. According to the Petroleum Planning & Analysis Cell (PPAC) under the oil ministry, India’s oil import dependency rose to 88.2% in April–February FY24, up from 87.7% in the corresponding period the previous year.

Higher crude prices would burden India’s economy, increasing costs for industries and consumers alike. Analysts warn that restrictions on Venezuelan crude could trigger a global price surge, exacerbating inflationary pressures on net oil importers like India.

India’s position on buying Venezuelan crude

Petroleum Minister Hardeep Singh Puri has consistently maintained that India’s oil purchases are guided by economic viability rather than geopolitical considerations. Given the volatility in global energy markets, the Indian government has reiterated its stance of sourcing affordable crude from available suppliers, prioritizing energy security over diplomatic pressures.

As the world’s third-largest consumer of crude oil, India’s fuel demand is expected to continue its upward trajectory. PPAC projections estimate petroleum product consumption to rise by 4.7% in FY26, reaching 252.93 million tonnes. This growing demand makes it imperative for India to secure stable and diversified oil sources.

Strategic timing amid high-level US-India trade talks

The tariff threat coincides with an upcoming high-level visit by US officials to India. Assistant US Trade Representative for South and Central Asia Brendan Lynch, along with a trade delegation, is set to begin a four-day visit on March 25. The US Embassy has highlighted “trade” and “investment” as key discussion points, indicating broader bilateral economic negotiations.

With crude oil being India’s largest import by value, any disruptions in supply chains could have significant economic ramifications. As refining capacity expands — currently standing at 257 million tonnes per annum—India remains a critical player in global oil markets.

The coming weeks will be crucial as India navigates this fresh geopolitical challenge, balancing its energy security needs against the growing complexities of international trade policies.