How Venezuela’s reopening helps India’s energy agenda

As American sanctions on Venezuela end, Caracas may dispatch to India and the US 400,000 barrels per day that it now sends to Beijing, three people aware of the matter said. New Delhi, the world’s third-largest oil buyer, used to purchase 400,000 bpd from Venezuela until the US imposed sanctions in 2020.

“China was importing about 400,000 bpd of crude from Venezuela earlier. Part of this may be diverted to India now, and the US would obviously be among the key buyers,” one of the three people cited above said on the condition of anonymity.

The development comes at a time when India has reiterated its commitment to maintain diverse sources of crude oil. While Indian public sector refiners primarily handle light crude, Reliance Industries Ltd’s Jamnagar refinery and Indian Oil Corp.’s Panipat refinery are complex units capable of refining the coarse crude pumped by Venezuela. Reliance has already booked cargoes from Venezuela, expected in India by April.

The development gains significance since India imports nearly 90% of its oil requirements and sourced oil worth $161 billion last fiscal year. India’s petroleum product consumption is projected to increase by 4.65% and reach a record 252.9 million metric tonnes (mmt) in FY26. India is also the world’s fourth-largest refiner with 258.1 million tonnes per annum (mtpa) refining capacity, which is expected to reach 309.5 mtpa by 2030.

The US has withdrawn the 25% punitive tariff on India, on condition that India stops buying Russian oil. Although the government and refiners have not announced any plans to halt Russian oil, supplies are set to fall significantly, with refiners not placing any fresh orders.

In response to an emailed query from Mint, the spokesperson of the US embassy in India said: “I can’t confirm India’s plans for potential oil imports from Venezuela. I would note that President Trump agreed to remove the additional 25% tariff on imports from India in recognition of India’s commitment to stop purchasing Russian Federation oil. Accordingly, the President signed an Executive Order last Friday removing that additional 25% tariff.”

Queries emailed to India’s ministries of petroleum and natural gas, external affairs and commerce and industry; the embassy of Venezuela in New Delhi, Venezuela’s state-owned oil company Petróleos de Venezuela SA (PDVSA), IOCL, Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd and Reliance Industries went unanswered.

Gaurav Moda, partner and leader for energy at EY-Parthenon India said, “Combining that (the complexity of Indian refineries) with India’s rapid growth and energy requirements and global geopolitics, constant refresh and diversification of our energy feedstock portfolio has become essential and allows us to be nimble in securing our immediate and long-term needs.”

Kirit Parikh, former member (energy) of the erstwhile Planning Commission of India added, “Importing more oil from Venezuela should not be a problem as long as it is within the capacity of the refinery calibration. Also, as China is not buying now, India should be able to secure better pricing for Venezuelan crude which leads to higher refinery cost due to its dense and viscous character.”

However, the diversion to Venezuela comes at a cost since Russian suppliers offer discounts of $8-12 per barrel. An SBICAPS report on Tuesday raised concerns over the impact of the India-US trade deal on the cost of India’s energy basket.

A shift in trade routes is underway, according to Kpler analyst Sumit Ritolia. He expects Russian crude to pivot toward China as Indian demand cools, while Venezuelan barrels move to fill the gap in India. With contracts already signed by Indian refiners, the country’s push to diversify its oil supply is now becoming a reality, Ritolia said.

“If supply certainty and sanctions clarity hold, India could potentially source around 8-10% of its crude import requirement from Venezuela, though volumes would remain contingent on logistical reliability, payment channels and geopolitical developments, making the shift incremental rather than a full-scale replacement of Russian barrels,” he added.

India has pushed ahead with the diversification of import sources after the US sanctioned Rosneft and Lukoil, the largest suppliers of Russian oil. The latest US decision to revoke the 25% additional tariff on India contingent on New Delhi stopping Russian oil imports has further accelerated the process.

According to sector experts, if India scales back Russian crude purchases, the gains would likely be spread across multiple suppliers rather than concentrated in one region.

“The market is currently in a phase of balance rather than barrels — the focus is on managing trade flows and geopolitical exposure rather than maximising volumes. Middle Eastern (West Asian) producers such as Saudi Arabia, Iraq, the UAE and Kuwait would be first in line given proximity, established trade flows and grade compatibility, while US exports would remain supported under the broader trade deal framework, potentially accounting for up to 10% of India’s intake. Beyond this, Canada, Venezuela and other Atlantic Basin producers—including Nigeria, Angola, Brazil and Mexico—could see incremental flows if price and freight economics align,” Ritolia of Kpler said.

India, has, however maintained that its oil import policy is driven by its national interest. Addressing reporters on Tuesday, foreign secretary Vikram Misri said that India will maintain multiple sources of energy and diversify them to ensure stability, with national interest guiding all purchases.

“Our approach is to maintain multiple sources of supply and diversify them as appropriate to ensure stability. Therefore, I would say that the more diversified we are in this area, the more secure we are,” Misri said.

Addressing a press conference on Wednesday, Union petroleum minister Hardeep Singh Puri said the US trade deal process has just begun.

“This is just the start of the process. Rejoice in the fact that from imposition of a punitive tariff…we are now back to doing business. Give it a little time,” Puri said.