US President Donald Trump has announced a 25% extra tariff on countries purchasing oil and gas from Venezuela. Trump stated that this tariff is being imposed to address the issue of Venezuela allegedly sending criminals to the United States. The new tariff is set to take effect from April 2, 2025. While the primary goal is to weaken Venezuela economically, the decision will also have a ripple effect on countries around the world, including India.
According to a report by Financial Times, India imported approximately 191,600 barrels of crude oil per day from Venezuela in December 2023, which increased to 254,000 barrels per day in January 2024. However, the volume decreased later. Reports from Kepler commodity market analytics show that in January 2025, India imported about 65,000 barrels per day, and in February 2025, it rose to 93,000 barrels per day from Venezuela.
Venezuela Offers Cheaper Oil to India
India benefits from purchasing oil from Venezuela at lower prices compared to Russia and the Middle East, as the crude oil from Venezuela is heavier, which Indian refineries can process more easily. Major Indian companies like Reliance Industries and Indian Oil Corporation (IOC) purchase large quantities of crude oil from Venezuela. In July 2024, Reliance was granted permission to buy oil from Venezuela, with Washington issuing a license for it. According to Kepler’s data, Reliance’s share of the oil purchased from Venezuela in 2024 was about 20 million barrels.
Rising Costs and Inflation Concerns
The imposition of tariffs on Venezuela could make oil imports more expensive for Indian refiners and cause disruptions in the supply chain. This may lead to inflation, affecting sectors such as manufacturing and transportation, and slowing down India’s economic growth. This situation is reminiscent of the impact India faced when sanctions were imposed on Iran, which previously provided cheaper oil to India due to its proximity. As a result, India had to reduce its oil imports from Iran significantly.
Shashi Rai
