US President Donald Trump has announced on Monday that he will impose 25 percent tariffs on all countries that buy oil and gas from Venezuela. Trump's move is likely to cause huge loss to India's energy sector. Trump has taken this step to target Venezuela but it will affect countries like India, China as these countries buy a lot of oil and gas from Venezuela.
Since returning to the White House in January, Trump has imposed tariffs on both colleagues and opponents to influence economic and diplomatic policies.
He wrote on his Truth social network about putting tariffs on Venezuela, 'Venezuela has been very hostile towards America and our freedom. Therefore, any country that buys oil and gas from Venezuela will have to be forced to pay a tariff of 25% on any kind of business with the US.
Trump said that Venezuela deliberately sends criminals to America. He made it clear that 25% tariff would be in addition to other tariffs.
According to the news agency AFP, Trump signed an order to impose tariffs on oil purchase from Venezuela on Monday itself, after which both direct or indirect oil, gas purchases from Venezuela will impose a tariff of 25%. The tariff may be applicable from April 2.
Venezuela oil comes in America, Spain, India and Black Market. The US, Spain and India buy oil from Venezuela through a license given to Chevron Corp, Repsol SA and Reliance Industries Limited respectively while China buys oil from Venezuela via Black Market.
India's government oil refinery companies have reduced the purchase of oil from Venezuela in recent months. At the same time, Reliance has constantly bought oil from Venezuela and has also received a lot of discount on oil.
How will the tariff on Venezuela affect India?
India is one of the leading buyers of Venezuela oil, which has imported 2.2 crore barrels of oil in 2024. In January, its purchase increased to 254,000 barrels per day, in December 2023, the import was around 191,600 barrels per day in which Reliance Industries bought 127,000 barrels per day.
Venezuela can be expensive to buy oil from Venezuela for Indian refiners and supply chains may be interrupted for Indian refiners.
If the oil prices of America rise from the tariff of America, then it can increase inflation in India, which can affect transport, manufacturing and overall economic growth. There has been a geopolitical uncertainty since wars and Trump's arrival around the world, due to which Indian refiners may face problems of business policies and changes in supply chain in the coming months.
Trump's order states that the tariff will remain in force until a country stops the import imports of Venezuela for at least one year. However, if America wants, he can cancel it before its discretion.
According to an Economic Times report, China, the largest buyer of Venezuela's crude oil, bought about 503,000 barrels per day in February, 55% of the total exports of Venezuela. Spain, Italy and Cuba also buy Venezuela oil. America itself buys Venezuela oil but in early April it can stop buying oil from Venezuela.
After tariff on Venezuela, Indian refiners may have to change their strategy of oil purchase.
India's refiners can turn towards Russia
The news agency Reuters, citing sources, said that India's government oil companies are issuing less tenders for the purchase of crude oil from Indian Oil Corp and Bharat Petroleum Corp Venezuela as Russian oil supply is now getting stable. The western ban on Russian oil has started to soften since the arrival of Trump and Russian oil is reaching India via unless tankers.
After Trump's tariff on Venezuela, Indian refiners can consider increasing the import of Russian crude oil.
India was also affected by the ban on Iranian oil
India earlier used to buy a lot of oil from Iran. Buying oil from Iran was very cheaper to India due to short distance, but many restrictions were imposed on Iran's nuclear program. Iran's oil was also banned, which affected India.
India had to reduce oil purchases from Iran a lot and since 2023, there is no data available from Iran to India's oil purchase. According to the United Nations' International Trade COMTRADE Database, in 2023 India bought $ 1.02 billion crude oil from Iran.
Currently, India buys almost equal oil from Iran. After the ban on Iranian oil, now Indian refiners are going to face a lot of problems with tariffs on Venezuela oil.
