As Tariff Tensions Simmer, US Looks To Indian Energy Companies For Venezuela Oil Push

Even as US Secretary of State Marco Rubio hails India as a refining superpower, assessment of New Delhi’s increased crude purchases, oilfield investment and reduced Russian sourcing are three key separate yet integrated issues facing the Modi Government amidst a strong push for Indian refiners, particularly Reliance, to process more Venezuelan crude and explore oil production there.

For Rubio, the India trip is far from business as usual as the American dignitary gets an extensive tour of Jamnagar refinery of Reliance Industries, with its scale, advanced technology and integrated operations, that Washington is hoping to involve in its plans to invest in Venezuela’s oil fields and add to its costs and responsibilities, it may not be able to bear.

The refinery visit, on Wednesday, has involved an overview of the company’s investments across energy and digital infrastructure as well as wide-ranging discussions on the global energy landscape, technological advances, opportunities for commercial partnerships across conventional and new energy between Rubio, RIL Chairman and Managing Director Mukesh Ambani and Executive Director Anant Ambani, as per a late night statement from RIL.

US-Venezuela Oil Deal: Why India Is In Focus

The prime motivation behind the US capture of the South American nation on January 4, 2026 has been to gain control over crude oil reserves of Venezuela which holds about 18 per cent of the world’s oil reserves, which is more than Saudi Arabia’s 16 per cent share, Russia’s approximately 5-6 per cent and the United States’ around 4 per cent.

Venezuela alone has more crude oil reserves than the US and Russia combined.

This comes against the backdrop of an escalating West Asia crisis which has led to a tectonic shift in fuel trade dynamics, with India diversifying its fuel imports away from Russia, a traditional bulk supplier, under pressure of US tariffs.

According to Ajay Srivastava, founder, Global Trade Research Initiative, India’s crude imports from Venezuela surged from $255 million in FY2026 to $3.6 billion in just five months, April-August 2026.

Purchases from the United States also increased, from $405 million in July 2026 to $790 million in August.

Though Russia remained India’s largest crude supplier, purchases fell by about 25 per cent, from $7.3 billion in July 2026 to $5.4 billion in August. (See Fig 1)

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India-US Trade Deal: How Venezuelan Oil Could Affect Tariffs

There is also the trade angle.

A Care-Edge report notes that India’s applied general tariff on US imports today stands at 18 per cent, down from a 50 per cent peak conditional on India cutting back on sourcing Russian crude.

Critically, the Graham Act’s 100 per cent secondary-buyer tariff, if enacted and triggered, will push India’s effective tariff burden materially higher, making most merchandise exports to the US unviable.

A push for Venezuelan oil imports is seen as a negotiating tool in return for a long pending trade deal and facilitative tariffs for India.

“Russia’s share of India’s total crude imports consequently dropped from a peak of 51 per cent in July to 45 per cent in August. Reliance accounted for 74.3 per cent of India’s Venezuelan crude imports,” informs Srivastava, which explains Washington’s focus on the company.

Imports through Reliance’s SEZ Jamnagar stood at $1,695.3 million, or 47.3 per cent of the total, while Sikka accounted for $968.2 million, or 27 per cent.

Other imports comprised $421.3 million through Indian Oil’s Paradip facility, representing 11.7 per cent, $405.8 million through Mundra’s storage terminals operated by HPCL and others, accounting for 11.3 per cent and $95 million through Nayara Energy’s Vadinar facility, representing 2.7 per cent.

Together, these purchases accounted for India’s entire $3,585.6 million of Venezuelan crude imports.

Why The US Wants Reliance Industries To Process More Venezuelan Crude

“The US wants to encourage Indian refiners particularly Reliance Industries to refine more Venezuelan crude and explore oil production in Venezuela to help India diversify its oil supplies,” says Srivastava, striking a cautionary note over Washington now buying Russian diesel and Reliance involved in a $300 billion Texas project.

This puts India in a situation that calls for addressing three separate decisions, importing more Venezuelan crude, investing in Venezuela’s damaged oil infrastructure and moving away from Russian supplies, before committing to Washington’s proposal.

“Each carries different commercial and strategic consequences,” notes Srivastava. (See Fig 2)

Venezuelan Crude Imports: Costs And Refining Challenges For India

While India can process Venezuelan crude, whether it should expand purchases or invest in production would be a separate commercial judgment.

Venezuela’s crude is mostly extra-heavy, a thick, tar-like hydrocarbon requiring specialised diluents, upgrading facilities and heated transport infrastructure before it can be refined or exported.

“Such crude generally sells at a discount to light oil. During April-August 2026, India paid an average of $821 per tonne for high quality Saudi Arabian crude, compared with $612 per tonne for low quality Venezuelan crude. But the lower purchase price must be weighed against lower yields and higher handling and refining costs,” warns Srivastava.

As for more imports, India offers some of the world’s most complex, high-conversion refineries, capable of processing heavy, lower-grade crude and operating with thin refining margins.

Reliance Industries’ Jamnagar complex, the world’s largest refining facility, has substantial capacity designed to process extra-heavy blends.

Nayara Energy’s Vadinar refinery can process heavy, high-sulphur crude.

Suitable Indian Oil Corporation facilities, along with HPCL’s Visakhapatnam, or Vizag, refinery, also have desulphurisation and coking configurations suited to heavy crude.

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India’s Venezuela Oilfield Investment: Risks And Costs

The bigger dilemma is over investment in Venezuela.

Much of the country’s oil extraction equipment and export infrastructure is described as heavily damaged or derelict.

Production stands at roughly 1.1-1.2 million barrels per day, with crude exports of about 650,000-750,000 barrels per day.

Restoring output to its historical peak of more than 3 million barrels per day could take at least 7-10 years and require $75 billion to more than $100 billion to rebuild upgraders, restore power grids and repair marine export facilities.

Moreover, India has had a bad experience of investing in Venezuela.

Between 2010-2020 and in the events leading to the 2019 oil embargo, Indian refineries stopped buying Venezuelan crude to avoid secondary US sanctions which disrupted ONGC Videsh’s investments and forced it to halt operation as the US tightened restrictions on Venezuela’s state oil company.

Hundreds of millions of dollars in Indian dividend earnings were stranded in Venezuelan accounts, production from Indian equity investments was effectively frozen,and plans to expand oilfield development and secure long-term crude supplies were abandoned.

India is thus faced with the risk of another shift in US policy again putting its investments and earnings at risk. (See Fig 3)

US Tariff Relief For India: Will It Last?

There are other issues, mainly related to establishing whether Washington’s proposal would secure crude delivered to Indian refineries or require Indian firms to finance the recovery of Venezuelan production.

Purchasing available oil and financing an industry’s reconstruction carry substantially different costs, risks and timelines.

Though President Donld Trump waived punitive tariffs on October 16, giving India relief from threatened additional duties of up to 100 per cent linked to Russian oil purchases, there is no lasting certainty.

India’s Refining Capacity Could Strengthen Its Global Position

Kyunghoon Kim, Head of India & South Asia Team at Korea Institute for International Economic Policy (KIEP) finds a brighter side.

India is the world’s fourth-largest refining nation, accounting for 4.7 per cent of global capacity in 2025. India wasn’t always a refining superpower. It ranked around 20th or lower until the mid-1990s.

Economic liberalisation spurred investment and boom. India entered the top 10 in 1999 and the top five in 2006, points out Kim. Damage to refineries in Russia and the Middle East could further strengthen India’s position.

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