US President Donald Trump has imposed a 25% tariff on oil and gas imports from any country that continues to buy crude from Venezuela. This decision, effective from April 2, is part of Trump’s strategy to use trade policies to exert economic and diplomatic pressure. Although primarily targeting Venezuela, the move is expected to impact key buyers like India, China, Spain, and Italy.
Announcing the decision on Truth Social, Trump accused Venezuela of being “hostile” to the US and deliberately allowing criminals into the country. He stated that nations importing Venezuelan oil will face an additional 25% duty, on top of existing tariffs.
This measure adds to Trump’s aggressive economic tactics, blending tariffs and secondary sanctions, which punish third parties for engaging with sanctioned entities. Venezuelan oil reaches international markets through licensed imports by companies like Chevron (US), Repsol (Spain), and Reliance Industries (India), while China dominates the black-market trade.
What It Means for India
India is a major buyer of Venezuelan crude, having imported 22 million barrels in 2024. In January alone, India bought 254,000 barrels per day (bpd)—nearly half of Venezuela’s total exports. Reliance has been importing Venezuelan oil under special waivers, while state-run refineries have reduced purchases.
However, with the new tariff in place, Indian refiners could face higher procurement costs and supply chain disruptions. The duty will remain until a country stops buying Venezuelan oil for at least a year, although the US reserves the right to lift it earlier.
To offset potential cost increases, Indian refiners may shift focus to Russian crude. Reports indicate that Indian Oil Corporation (IOC) and Bharat Petroleum (BPCL) have already started reducing spot crude purchases as Russian supplies stabilize.
Broader Trade Tensions
Trump’s Venezuelan oil tariff is part of a wider trade policy shift. The US is set to impose new tariffs on cars, pharmaceuticals, and semiconductors on April 2. Treasury Secretary Scott Bessent hinted at upcoming measures targeting 15 countries to correct trade imbalances.
Tensions between the US and Venezuela have worsened due to immigration policies. The US recently suspended deportation flights to Venezuela, accusing its government of non-cooperation. After negotiations, flights resumed, with 200 Venezuelans deported via Honduras. Meanwhile, Washington has extended Chevron’s license to operate in Venezuela until May 27, suggesting a selective sanctions approach—allowing US firms to maintain some level of engagement while restricting competitors.
Impact on China
China, the largest buyer of Venezuelan crude, imported 503,000 bpd in February, accounting for 55% of Venezuela’s exports. The new tariff adds pressure on China’s private refiners, particularly in Shandong province, where Venezuelan crude is used for fuel and bitumen production.
However, China’s oil sector is unlikely to be crippled. Enforcement challenges, workaround trade methods, and alternative suppliers may soften the impact. Yet, the tariffs will raise costs for smaller refiners already struggling with low profits, declining domestic demand, and US sanctions on Iranian oil.
India’s Next Move
India’s response to the tariffs will depend on how refiners adjust. If Venezuelan crude becomes too expensive, companies may increase reliance on Russian oil or Middle Eastern suppliers. However, volatility in global oil prices could pose broader risks to India’s energy security.
If US tariffs lead to higher global crude prices, India could face inflationary pressures—affecting transport, manufacturing, and economic growth. With geopolitical uncertainties rising, Indian refiners must navigate shifting trade policies and rework supply strategies in the months ahead.
