Venezuelan crude emerges as lever in US-India energy diplomacy

Officials confirmed this week that the United States and India are engaged in extensive negotiations over the possible sale of Venezuelan crude oil to New Delhi.

The development has implications for bilateral economic relations, geopolitics, and global energy markets.

The talks are part of Washington’s broader effort to curb Russia’s influence over global oil markets and strengthen strategic ties with India, the world’s third-largest oil importer and consumer.

A geopolitical energy pivot

US envoy Sergio Gor said last Friday in New Delhi that the United States and the Indian government are engaged in “active negotiations” over Venezuelan oil shipments.

The talks are linked to a temporary trade agreement under which the United States has agreed to cut import duties on Indian goods from punitive levels to 18%, provided that India diversifies its crude oil supplies away from Russian oil.

Gor told reporters, “India is not the focus of this.” He added, “The United States doesn’t want anyone buying Russian oil,” underscoring Washington’s broader aim of reducing Moscow’s financial support for the war in Ukraine.

For years, India has relied heavily on discounted Russian seaborne crude, particularly since February 2022, when Moscow was sanctioned by Western countries.

However, Washington and Brussels have criticised New Delhi’s reliance on cheaper Russian grades, and energy supply has become a key diplomatic issue.

Why Venezuelan oil? The strategic logic

Despite holding the world’s largest proven oil reserves, Venezuela’s production and exports have stagnated for years due to political instability and international sanctions.

The United States eased certain restrictions on Venezuela’s oil sector following the capture of President Nicolás Maduro in early 2026.

General licences issued by the US Treasury have allowed major oil companies and trading firms to resume sales of Venezuelan crude.

Several Indian refiners have already placed orders for Venezuelan oil.

Indian state-owned Bharat Petroleum and HPCL Mittal Energy have both purchased Venezuela’s heavy Merey crude, as per a Reuters report.

At the same time, media reports also suggest that Indian Oil Corp has acquired Venezuelan supplies, reflecting the diversification of imports by state-run and private firms, according to recent trade data.

Analysts say Venezuelan crude, which is often priced well below international benchmarks, offers India a cheaper alternative to Russian grades while helping to secure reliable energy supplies.

However, concerns remain over quality and transportation costs.

Trade deal dynamics: a diplomatic balancing act

A US-India trade agreement that has been negotiated for months is linked to the drive for Venezuelan oil supplies.

Recently, President Donald Trump agreed to a tariff reduction under an interim agreement that eliminates a 25% punitive penalty that was previously applied to imports from India.

India's imports of Russian oil, which Washington claimed financed Moscow's war effort, were linked to that levy.

Indian officials have emphasised that energy decisions are ultimately commercial, notwithstanding the United States' emphasis on diversification.

Delhi is still dedicated to diversification "if it proves to be economically viable," according to a spokesman for India's Ministry of External Affairs.