Trump’s Venezuelan oil tariff threat to have little impact on India, experts say

This, however, is unlikely to have any material impact on India, experts told Mint. That’s because the share of Venezuelan crude oil in India’s oil import basket is less than 1%. And with Reliance Industries – a major importer of Venezuelan crude to India – halting fresh imports, the country’s position has improved.

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India’s crude shipments from Venezuela peaked almost a decade ago and have been declining since, completely stopping between 2022 and 2023. India resumed crude oil imports from Venezuela in December 2023 as the US temporarily eased sanctions on the Venezuelan oil sector. While these sanctions were restored in a few months, Reliance and Nayara Energy continued to import Venezuelan crude through specific sanction exemptions.

“Venezuelan crude constitutes just around 1% of India’s entire crude basket. However, since it is available at a discount to other crude oils, we imported 12% more Venezuelan crude in the first nine months of FY25 than in the entire FY24,” Sumit Pokharna, oil and gas analyst at Kotak Securities told Mint.

It’s a buyer’s market

Finding a replacement for Venezuelan crude will be easy as the global market currently has an excess of crude oil, said Varatharajan Sivasankaran, senior vice president at Antique Stock Broking.

This could increase the import costs of Indian refiners by a couple of dollars a barrel or shrink their refining margins marginally, leading to price pressures, but the overall impact is expected to be small. Experts expect crude oil prices to remain subdued – around the $70-75 a barrel – in the near term, owing to weak global demand.

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“OPEC+ is keen to unwind production cuts to gain market share, while Russian exports are also slated to increase as a Ukraine-Russia truce seems in sight. Hence, I don’t see any material impact (of the 25% tariff) on the global oil market on a standalone basis,” said Sivasankaran. Pokharna from Kotak Securities said the US itself is one of the largest importers of Venezuelan crude, second only to China. “So, it remains to be seen how far this move will be sustainable,” he said.

The US justified the tariffs by alleging that Venezuela has been sending “hundreds of violent criminals” to the country. But experts noted that Trump announced the Venezuelan tariff while softening his stance on broader reciprocal tariffs that are expected to take effect from 2 April.

Also read | Mint Explainer: Have India-US trade talks blunted Trump’s threat of reciprocal tariffs?

India may be vulnerable to these reciprocal tariffs as it has a high tariff differential with the US. However, it could mitigate the impact by agreeing to reduce tariffs on certain US goods and increase the amount of oil it imports from America.

Nandita Venkatesan contributed to this story.