Oil a deal clincher? Trump says India will stop buying Russian crude, will buy more from US, even Venezuela | Business News

India’s hefty imports of Russian crude had emerged as major point of friction for the Donald Trump administration in its relationship with New Delhi. In August, Trump announced that an additional 25 per cent tariff on Indian goods—on top of the 25 per cent tariff already announced—as penal tariff on India for buying Russian crude. The Trump administration has held the view that by buying large quantities of Russian crude, India was helping Russia finance its war in Ukraine.

From being a peripheral supplier of crude to India, Russia emerged as its largest source following Moscow’s February 2024 invasion of Ukraine, as Western buyers of Russian crude started reducing imports. Over the past couple of months, India’s Russian oil imports have declined steadily to a three-year low, as per tanker data. This followed US sanctions against Russia’s top oil producers and exporters Rosneft and Lukoil. From the 2025 peak of 2.09 million barrels per day (bpd) in June, India’s Russian oil imports dropped to 1.16 million bpd in January 2026, according to data from commodity market analytics firm Kpler.

Meanwhile, the US has consistently been India’s fifth-largest oil supplier for a few years now.

According to industry insiders, India has been increasing its oil imports from the US and can continue to do so, provided it is priced competitively, as the cost of shipping oil from the US to India is currently more than double of getting oil from West Asia. The other key consideration would be the US crude grades on offer and their compatibility with Indian refineries. This is because different crude grades are suitable for different petroleum products from an operational and efficiency perspective. Indian refineries are currently more accustomed to crudes from traditional West Asian suppliers, and now even Russian crude, although they have the capability to process nearly all types of crude.

Ramping up liquefied natural gas (LNG) imports from the US would be relatively straightforward from a commercial perspective. Washington is New Delhi’s second-largest supplier of LNG, after Qatar.

Higher freight, while also a factor in importing LNG from the US, is not as major a concern as in the case of crude oil. This is because American gas itself is usually priced at a significant discount to gas from other major suppliers like Qatar. This means that despite paying more for transportation of American LNG to India, the landed price for Indian LNG importers would mostly be lower than importing from West Asia. Also, unlike crude that has numerous grades and qualities, LNG from various geographies is broadly consistent and similar in quality.

Venezuelan oil, which India has not been importing due to US sanctions, presents a major opportunity for Indian refiners. Trump recently said that India will be purchasing oil from Venezuela, and that the deal or the “concept of the deal” to allow New Delhi to import Caracas’s crude oil is in place.

India — specifically private sector refining giant Reliance Industries (RIL) — was a regular buyer of Venezuelan crude prior to the imposition of US sanctions on Caracas in 2019. Thereafter, oil imports from Venezuela stopped within a few months. Caracas was New Delhi’s fifth-largest supplier of oil in 2019, providing close to 16 million tonnes of crude to Indian refiners.

Then in October 2023, the US eased sanctions on Venezuela’s petroleum sector, resulting in RIL and a few other Indian refiners restarting Venezuelan oil imports. But imports stopped when that sanction waiver lapsed. A few months later, RIL was able to restart Venezuelan oil imports after obtaining a specific sanctions waiver from the US. But in the summer of 2025, the company halted oil imports from Venezuela after the Trump administration threatened higher tariffs on countries buying Venezuelan crude. No Venezuelan oil has been imported into India for months now.

In India, private sector players RIL and Nayara Energy have been the biggest processors of heavy crudes, the kind which Venezuela produces. Limited heavy crude volumes are also processed occasionally by a few public sector refineries like Indian Oil’s Paradip refinery and Mangalore Refinery and Petrochemicals’s unit in Mangaluru. HPCL-Mittal Energy also processes heavy crudes from time to time, and so do a few other Indian refineries. According to a recent note by Kpler, planned investments aimed at increasing refinery complexity—such as upgrades at HPCL’s Visakhapatnam and a few other refineries—should expand India’s ability to process Venezuelan heavy crudes, gradually broadening system-wide intake capacity.

Experts believe that Venezuelan crude offers India a politically acceptable diversification option amid American pressure on India’s Russian oil imports. Any increase in Venezuelan crude imports is also expected to increase India’s negotiating leverage with its traditional West Asian oil suppliers.