Why Washington’s Venezuela Push And Russia Pressure Matter For India’s Fuel Bill

New Delhi: The dramatic removal of Venezuelan President Nicolas Maduro in a US-led operation and Washington’s announcement that American oil majors will take over Venezuela’s energy sector have sent shockwaves through global energy markets.

For India, one of the world’s largest crude importers, the move comes at a delicate moment as President Donald Trump simultaneously threatens to raise tariffs on Indian exports over New Delhi’s continued purchases of discounted Russian oil. In the 2025-26 fiscal year, India’s crude oil imports from the US surged nearly 92 per cent, even as Russia remained the largest individual supplier.

According to data shared by the Ministry of Commerce and Industry, India imported 178.1 million tonnes of crude between April and November last year, of which 60 million tonnes came from Russia and 13 million tonnes from the US. During the same period in 2024, India had imported 165 million tonnes of oil, which comprised 62.4 million tonnes from Russia and just 7.1 million tonnes from the US.

India’s import mix matters for domestic inflation, refinery operations, foreign exchange dynamics, and geopolitical autonomy. The evolving US stance – linking oil imports from Russia with punitive tariffs and seeking control of Venezuelan oil – creates strategic challenges for New Delhi.

Speaking to reporters aboard Air Force One, Trump praised Prime Minister Narendra Modi, calling him “a very good man” and “a good guy”, while warning that the US could quickly raise tariffs on India if required.

“He knew I was not happy. It was important to make me happy. They do trade, and we can raise tariffs on them very quickly, and it would be very bad for them,” Trump said.

The remarks came as US Senator Lindsey Graham pressed for congressional approval of a bill to impose steep secondary tariffs on countries that continue purchasing Russian oil and gas if Moscow does not agree to a ceasefire in Ukraine within the next 50 days.

The tariff nexus directly affects India’s export competitiveness in the US market. Higher tariffs reduce Indian exporters’ margins, risk job losses in export sectors, and could shrink India’s overall trade footprint with its largest Western trading partner. This approach also signals a deeper shift: the US is treating energy sourcing choices, specifically Russian crude imports, as a strategic issue tied to geopolitics and foreign policy outcomes, and not just commercial trade.

India’s economy demands around five million barrels per day (bpd) of crude oil. Before the Ukraine war, West Asia dominated this supply. However, Russian crude supplies expanded rapidly after 2022 because they were offered at significant discounts amid Western sanctions. That helped India reduce its crude import bill and contain inflation.

Russian crude, though heavier and requiring specific refinery configurations, became a practical economic choice for Indian refiners. Discounts often mean cheaper domestic fuel after refining, which directly benefits consumers.

Unlike some US allies, India has historically pursued strategic autonomy in its energy partnerships. New Delhi argues that energy security is a top priority – a necessity to power a fast-growing economy of over 1.4 billion people. In Indian official statements responding to US tariff threats, New Delhi has emphasised that market dynamics - not geopolitical alignment – drive its oil import decisions.

On the flip side, a US-led takeover or restructuring of the Venezuelan oil sector could bring a major strategic and financial gain for Indian oil public sector units (PSUs). This can help recover $1 billion in long-pending payments and restart crude production from oilfields in the South American country operated by Indian companies.

ONGC Videsh Limited (OVL) and Corporacion Venezolana del Petroleo (CVP), a subsidiary of Petroleos de Venezuela, SA (PdVSA), the Venezuelan state-owned oil and natural gas company, have a joint venture called Petrolera Indovenezolana SA for the production and exploration of oil in the San Cristóbal field, in which OVL has a 40 per cent stake, while PDVSA has a 60 per cent of the remaining stake. The OVL investment in the San Cristobal project is approximately $200 million.

An international consortium comprising OVL, Indian Oil Corporation (IOC), Oil India Limited (OIL), Repsol of Spain and Petronas of Malaysia, was declared the winner of an international bidding process in April 2008 to develop a multi‐million-dollar oil project integrated in Carabobo in the Orinoco belt of Venezuela. Reliance Industries Limited (RIL) has a 15‐year crude supply contract with PdVSA.

But Venezuela has failed to clear dividends owed to OVL. According to a report by news agency PTI, Venezuela has not paid $536 million linked to OVL’s 40 per cent stake in San Cristobal up to 2014. A similar amount is due for years past 2014, but the settlement has been frozen as Venezuela has not permitted an audit for that period.

A former executive of an Indian oil PSU, speaking to ETV Bharat on the condition of anonymity, explained that the US’s ExxonMobil primarily explored oil in Venezuela prior to Hugo Chavez’s ascension to power. After becoming President, Chavez nationalised the oil sector in Venezuela. Chávez described his policies as anti-imperialist, being a prominent adversary of the US’s foreign policy as well as a vocal opponent of neoliberalism and laissez-faire capitalism.

“Carabobo was a new project that was put up for international bidding,” the former oil PSU executive said. “But Malaysia’s Petronas left the deal following controversies.”

That is how Indian interests in Venezuela’s oil sector got disrupted.

If US companies successfully rebuild Venezuelan production and export heavy crude to the global market, India could eventually benefit from another large source of crude outside Russia or West Asia. But this transformation will take time and hinges on legal, political, and technical realities.

India’s refiners may ramp up purchases from traditional West Asian suppliers such as Saudi Arabia, the United Arab Emirates (UAE), and Kuwait. However, these buyers will likely charge market-based prices, which might be higher than Russian discounts.

Though Indian crude imports from the US have risen, the scale remains small relative to total needs. US crude tends to be lighter, different in quality from some of the heavy grades that Indian refineries are optimised for. Increased US crude trade requires logistic adaptation and price competitiveness.

The US stance linking oil trade to tariffs, and the unfolding situation in Venezuela, mark a turning point in how energy security and geopolitics interact. For India, decisions on Russian oil imports are no longer merely commercial but are deeply intertwined with international trade dynamics, geopolitical partnerships, and domestic economic stability. Navigating this terrain will require careful diplomacy, diversified sourcing, and strategic economic planning to sustain growth in a shifting global energy landscape.