US offer on Venezuelan oil exposes India’s shrinking energy autonomy

The Trump administration’s signal that it may allow India to buy Venezuelan oil under a Washington-controlled framework highlights a deeper and more troubling reality for New Delhi: India’s energy security is increasingly being shaped by geopolitical pressure rather than commercial logic.

A senior Trump administration official has said the US would permit India to resume purchases of Venezuelan crude, confirming that such trade would take place under a framework overseen by Washington and still under finalisation.

The confirmation follows remarks by US Energy Secretary Christopher Wright, who said Washington would allow Venezuelan oil to flow to “almost all countries”, but only under US control, with revenues routed through monitored accounts.

According to Wright, the proceeds would be channelled in a way that “benefits the Venezuelan people, not corruption, not the regime”. He also noted that buyers from the US, Europe and Asia had already expressed interest, underscoring Washington’s intent to act as gatekeeper in the redistribution of Venezuelan oil.

For India, which was once among Venezuela’s largest crude buyers, the proposal offers supply diversification in theory but raises uncomfortable questions in practice. The arrangement would effectively replace direct commercial engagement with a US-mediated mechanism, reinforcing India’s vulnerability to shifting American policy priorities.

The timing is significant. Reliance Industries has said it does not expect any Russian oil deliveries in January, noting that its Jamnagar refinery has not received Russian shipments in the past three weeks, according to Reuters.

This comes amid warnings from the Trump administration that US import tariffs on India could rise as high as 500 per cent over its continued purchases of Russian crude.

US Senator Lindsey Graham has said Trump has greenlit legislation to “punish” countries such as India, China and Brazil for buying Russian oil despite sanctions. The proposed law, Graham said, would give Trump “tremendous leverage” to force countries to stop purchasing discounted Russian crude that finances Moscow’s war effort.

Together, these moves point to an increasingly coercive energy diplomacy, where access to oil is being weaponised to advance strategic objectives. India, which has repeatedly stated that its Russian oil purchases are driven by national interest and the need for affordable energy, now finds itself under pressure to replace one sanctioned supplier with another — but only on US terms.

Historically, Venezuelan crude was a commercially sound fit for Indian refiners. Heavy and high-sulphur grades from Venezuela were ideally suited to India’s complex refineries, allowing players such as Reliance Industries, Nayara Energy and MRPL to extract value from discounted barrels.

Venezuela supplied 6.7 per cent of India’s crude imports in FY2018, with volumes peaking at 400,000–500,000 barrels per day. Between FY2018 and FY2020, it consistently ranked among India’s top six suppliers, with imports peaking at $7.2 billion in FY2019.

That trade collapsed to zero by FY2022-23 as US sanctions disrupted payments, shipping and compliance. By FY2026 (April–October 2025), Venezuela’s share had recovered only marginally to 0.3 per cent, a reminder of how sanctions, rather than refinery economics, now determine trade flows.

Rubix Data Science has described this decline as structural rather than cyclical. While brief sanctions relaxations reopened limited trade, the absence of long-term policy clarity has deterred sustained engagement. In response, India has diversified its crude sourcing towards West Asia, Russia and the US, reducing dependence on politically volatile suppliers, but not escaping geopolitical exposure.

Notably, Indian investments in Venezuela have endured despite the collapse in trade. ONGC Videsh retains stakes in two oil projects, while Indian Oil Corporation and Oil India hold minority interests in heavy-oil ventures alongside ONGC Videsh. Venezuela has also approached India for investment in lithium, nickel and rare earths, signalling its broader resource ambitions.

Yet any revival of oil trade or expansion of investment will remain hostage to US sanctions and political calculations in Washington. The proposed Venezuelan oil framework does not restore market access so much as repackage control, offering India barrels but stripping it of bargaining power.

For a country that imports over 85 per cent of its crude requirements, the episode underlines a hard truth: India’s energy security is no longer just about price and supply, but about navigating an increasingly narrow corridor defined by global power politics. Venezuela’s reduced role in India’s crude basket is not the result of market irrelevance, but of a world where oil flows follow geopolitical permission slips rather than refinery demand.

With agency inputs