US President Donald Trump’s latest tariff announcement has raised fresh concerns for India’s oil import strategy. His decision to impose a 25 per cent secondary tariff on nations purchasing Venezuelan oil has complicated India’s energy diversification efforts. The announcement, made late on Monday, warned that any country, including India and China, that continues to buy Venezuelan crude will face new duties from April 2.
Trump justified the move by citing Venezuela’s hostility toward the US, stating that buyers must pay an additional 25 per cent tariff on any trade they conduct with America. His statement has sparked uncertainty in global oil markets, particularly for nations like India, which have long sought alternative crude sources to manage fluctuating global prices and geopolitical risks.
India’s Petroleum Minister Hardeep Singh Puri has consistently maintained that India is open to purchasing Venezuelan oil if it makes economic sense. The country has historically diversified its crude imports to reduce dependency on any single supplier, and Venezuela has been a key alternative source. However, the new tariff threat has forced Indian policymakers to reconsider their approach.
For years, US sanctions have restricted Venezuela’s oil exports, but India remained one of its occasional buyers, especially before tighter sanctions took effect in 2019. The Biden administration had briefly eased restrictions in 2023, allowing some exports, but Trump’s latest move signals a shift back to a stricter stance. His administration has made it clear that trade relations with nations purchasing Venezuelan oil will come under scrutiny.
Indian refiners are now facing a dilemma. Some had explored options to resume purchases from Venezuela, hoping to take advantage of competitive pricing. With the new tariff, the cost of importing Venezuelan crude may outweigh the benefits, making it less attractive. Indian officials are assessing whether continuing trade with Venezuela could lead to retaliatory measures from the US that might impact broader economic relations.
Experts believe that India must carefully evaluate its next steps. If it chooses to comply with Trump’s directive, it may have to find alternative suppliers, likely at a higher cost. The Middle East remains India’s largest oil supplier, but diversifying beyond traditional sources has been a crucial strategy to ensure energy security. While Russia has emerged as a major supplier in recent years, increasing dependence on Russian crude presents its own set of geopolitical risks.
India has consistently advocated for energy trade to remain free from political disruptions, urging global powers to avoid using oil as a tool for economic coercion. The government may push for diplomatic negotiations to seek clarity on how the new tariffs will be implemented and whether any exemptions could be considered.
Meanwhile, Indian refiners are adjusting their plans. Some private refiners, who had been looking at Venezuela as an option, are expected to pivot towards other Latin American suppliers or boost imports from Russia. Public sector refiners will likely follow the government’s guidance, ensuring that energy security is maintained without escalating tensions with the US.
Trump’s latest move adds another layer of complexity to India’s energy strategy at a time when the global oil market remains volatile. With the new tariffs set to take effect in April, Indian policymakers must weigh the long-term impact on trade, diplomatic ties, and energy security. The coming weeks will be crucial in determining whether India seeks a diplomatic resolution, shifts its import strategy, or braces for the economic fallout of the new US trade policy.
Indian energy analysts warn that Trump’s decision could have ripple effects beyond just oil imports. If the US follows through on enforcing secondary tariffs, India’s broader trade relations with the US could be affected, particularly in sectors where American investments play a significant role. Given the strong economic ties between the two nations, Indian officials may push for negotiations to soften the impact or seek exemptions.
The move also raises concerns about global oil prices. If major buyers like India and China scale back Venezuelan oil imports, supply chains could tighten, potentially driving up crude prices. Higher energy costs would put additional pressure on inflation, which remains a major concern for Indian policymakers ahead of key economic decisions this year.
New Delhi is also closely monitoring how other oil-importing nations react. If China, another major consumer of Venezuelan crude, decides to challenge the US stance or find workarounds, India may weigh similar options. Beijing has often used alternative payment mechanisms to circumvent US sanctions, including transactions in yuan or digital currencies. India, however, has generally sought to balance its trade policies without directly confronting Washington.
In the coming weeks, Indian refiners will need to reassess their procurement strategies. If the cost of Venezuelan oil rises due to tariffs, they may increase their reliance on Middle Eastern crude or ramp up Russian imports, despite Western pressure to limit purchases. The government may also explore deals with African or Latin American producers to offset potential supply disruptions.
Ultimately, Trump’s latest tariff threat forces India to make a critical decision. It must either accept the additional costs and maintain its energy diversification strategy or prioritize its trade relationship with the US by stepping away from Venezuelan crude. The next few months will reveal how India navigates this challenge, balancing economic interests with geopolitical realities in an increasingly unpredictable global energy landscape.
