Trump slaps tariff on buyers of Venezuelan oil. Here is what it means for India

Oil is Venezuela's main export. China, India and Spain are among the largest buyers.

India may have more to worry about on the Trump tariff front after the American president announced that any country buying oil or gas from Venezuela would pay a 25 percent tariff on trades with the US.

India is one of the biggest importers of Venezuelan crude, buying 22 million barrels in 2024. Though Venezuela accounts for just 1.5 percent of India’s crude imports, the oil suits India’s refinery infrastructure better.

Oil is Venezuela's main export and China the largest buyer. India, Spain, Italy and Cuba are other leading consumers of Venezuelan oil.

The “secondary tariff” will kick in on April 2 when reciprocal duties against the US’s trading partners, including India, come into effect.

The tariff would be combined with any existing duties and expire a year after the country last imported Venezuelan oil, the executive order issued by Donald Trump on March 24 said.

The tax comes a little over a year after India resumed buying oil from the South American country, which has the largest proven oil reserves in the world. India restarted imports late in 2023 after three years following the US decision to lift sanctions on the country.

In 2024, Venezuela exported 6,60,000 barrels of crude a day, with India, China and Spain emerging as top buyers, The Financial Times has said.

During the year, India imported approximately 22 million barrels of crude from Venezuela.

The two countries have been looking to deepen energy ties as was evident from Venezuela’s vice president Delcy Rodríguez recent visit to New Delhi.

Evolving oil basket

India has been forced to be nimble with its crude import basket, which has gone through several changes in the past few years in sync with the evolving geo-political situation.

Venezuela, which was one of the biggest suppliers of crude to India, completely vanished from the scene after 2020 as American sanctions came into effect.

Russia, which supplied only 0.2 percent of India’s total crude oil imports before the Russia-Ukraine war, emerged as the largest supplier, even going past West Asian countries as if offered oil at a discount in the face of Western sanctions.

Russian oil supplies fell sharply earlier this year following US sanctions on January 10 that targeted producers, insurers, ships and middlemen to curtail Moscow's oil revenue, a Reuters report said.

Russian oil imports recovered in March, returning to near-usual levels after a three-month decline.

In March, India's imports of Russian oil, mainly Urals crude, were back at 1.54 million barrels per day (bpd), after falling from 1.1 million to 1.2 million bpd in the previous three months due to concerns about sanctions, Reuters said, citing data from analytics firm Kpler.

Indian refiners will issue fewer tenders for crude oil purchases on the spot market in the coming months, as Russian supplies bounced back, it said.

Indian refiners had all but stopped issuing spot tenders before this year as they gorged on Russian oil that has sold at a discount since some Western nations halted purchases and hit Moscow with sanctions over its 2022 invasion of Ukraine, it said.

But the January sanctions against 183 vessels forced Indian companies, including Indian Oil and Bharat Petroleum Corp Companies, to turn to the spot market to replace the disrupted Russian supplies.

Indian refiners plan to issue fewer spot tenders as traders have again begun offering Russian oil shipped with non-sanctioned tankers, Reuters said.

Trump’s tariffs add another twist to the tale, which will likely see India rejig its crude supplies.