Crude awakening: As Russia and Iran face pressure from Trump, can Venezuela fill India’s oil deficit?

The turmoil in global crude oil markets that began in March refuses to calm down. As the United States seeks to tighten the noose on Iran with economic blows, a new bill empowering the U.S. president to impose tariffs of up to 100% on countries that import Russian crude oil will be put to a vote in the coming months.And amid this continuing crisis, India, a major oil importer, faces important questions: What will happen when the world stops buying oil from Iran due to the threat of secondary sanctions? What will this mean for global crude oil prices? What will happen if China bows to American pressure and seeks alternatives to Iranian crude, effectively competing with India for crude oil supplies?Where will India get crude from if it faces tariffs of up to 100% on its Russian crude oil imports? The Middle East crisis has raised Russia’s share of India’s crude oil basket to more than 50%. Once that cushion is gone, what country will fill the void? Can Venezuela, which has suddenly made it to the list of India’s top crude oil suppliers, step up? We decode:

The changing dynamics of oil: Iran and Russia in the spotlight

Donald Trump’s administration launched “Operation Economic Pariah” against Iran, and on Monday US Treasury Secretary Scott Bessent unveiled an “economic D-Day” plan. The United States has warned countries and companies that continue to do business with Iran, stating that they would face retaliation from the United States.We announced sanctions targeting around 60 individuals, entities and vessels linked to Iran, expanding pressure on areas including finance, shipping, aviation, technology, gold and digital assets.However, the administration paused for now the toughest secondary sanctions, particularly measures that could hit major Chinese financial institutions involved in Iran’s oil trade. Bessent said the campaign aims to cut off Iran’s remaining economic lifelines and force countries to cut financial ties with Tehran.While India does not import crude oil from Iran, if China, which is the largest buyer, stops purchasing it, it would have implications for global crude oil prices.On the other hand, the Lindsey O. Graham Act that sanctions Russia has been approved by the United States Senate and will now go to the House. The bipartisan legislation gives the president broad powers to impose tough sanctions on Russia and countries that continue to buy Russian energy, including the ability to impose 100% tariffs on imports from countries that buy Russian oil and gas.If supplies from Iran and Russia shrink or disappear, what will it mean for India? Will Venezuela be able to recover?

Venezuela emerges as an important supplier to India

As crude oil supplies from the Middle East became unpredictable due to disruptions in the Strait of Hormuz, India stepped up its diversification. Since the US-Iran war began, Venezuela has become a key supplier of crude oil to India, making its way into the top five list. Currently, Venezuela ranks as the fourth largest exporter of crude oil to India.Russian oil remains the largest, at around 2 million barrels per day. Supplies from Latin America and Africa have also increased: Latin American crude accounted for 12.7% of India’s imports during April-July, up from 3.5% a year earlier, while the Middle East’s share fell to around 30% from 43%, according to Kpler data.Naveen Das, senior crude oil analyst at Kpler, acknowledges that Venezuela has become a really useful supplier to India again, but only since April this year.After a year of virtually nothing, Venezuelan crude is running at about 220,000-380,000 barrels per day, or about 8% of India’s imports, enough to make it India’s third or fourth largest source.According to the Kpler analyst, this crude oil goes almost entirely to a handful of refineries built to process it, primarily Reliance’s Jamnagar, as well as Paradip, Mundra and Vadinar.

Can Venezuelan oil compensate for the lack of Iranian and Russian crude?

Venezuela may have risen to be among India’s top five crude oil suppliers, but there are several inherent challenges for it to meaningfully replace the lack of Russian crude oil for the world and India in the future.The biggest problem is on Venezuela’s side: its oil capabilities are limited and the United States remains its top priority for oil exports. According to Pankaj Srivastava, senior vice president of Commodity Markets – Oil at Rystad Energy, since March 2026, Venezuelan exports have averaged around 1 million barrels per day, and India has received approximately 300 to 400 thousand barrels per day.The United States is the main destination for Venezuelan crude oil, as its complex refineries seek to maximize the use of waste conversion units.“Amid the ongoing shortage of middle distillates and record refinery runs in the US, US refiners are likely to retain priority access, leaving India as the second-largest buyer,” he tells TOI.Note the contrast: Venezuelan crude supply is around 1.2 million barrels per day, while India has consistently imported at least 1 million barrels per day of Russian crude since mid-2025.“Therefore, Venezuelan barrels cannot completely replace Russian supplies either in quantity or quality,” says Pankaj Srivastava.Another factor that complicates the accounts is the quality of the crude oil that Venezuela exports.Venezuelan crude oil is challenging to process due to its high TAN (Total Acidity Number), high density and high contaminants.India’s complex coastal refineries, with extensive residue upgrading and bottom-of-the-barrel conversion capacity, are well equipped to handle these grades.But Venezuela’s crude supply remains limited by structural deficiencies in its upstream and oil export infrastructure. Consequently, any sustained recovery in production and stabilization of exports will take time, says Pankaj Srivastava.But Venezuelan crude has very sour characteristics, which are not necessarily suitable for all Indian refineries, although it works well with complex Indian refineries like Reliance and Nayara.Manas Majumdar, Oil & Gas, Fuels and Resources leader at PwC India, says that because of these characteristics, Venezuelan barrels have historically traded at discounts to benchmark crude, which has helped refiners improve margins.“However, logistical challenges, longer shipping distances and geopolitical uncertainties mean that Venezuela cannot replace India’s traditional dependence on Middle Eastern suppliers or recent Russian oil,” he tells TOI.“So, with Iranian and Russian crude again sanctioned, Venezuelan crude cannot really make up for the potential gap, as Venezuelan production is limited and will take time to increase significantly; however, increasing supplies from Venezuela will partially cushion the impact,” he says.According to Kpler’s Naveen Das, Iran and Russia have different problems on substitution. India does not buy Iranian crude directly, so tougher sanctions on Iran hit India through higher prices rather than lost cargoes.Since India imports around 90% of its crude oil needs, a rise in global oil prices has a direct impact on its import bill and, in turn, retail prices of petrol and diesel.On the supply front, Kpler sees Russia as the real exposure: around 2.1-2.8 million barrels for about half of India’s imports.“Venezuela is simply not big enough to replace it. Venezuela produces about 1.3 million barrels a day in total and our forecasts indicate that it will stagnate; about 70% of its exports currently go to US refineries under the agreement established by Washington, and the crude itself is much heavier than that from the Russian Urals, so it cannot be swapped one for one at most Indian refineries,” he explains.“Realistically, Venezuela could supply India with perhaps 400-600 thousand barrels per day in a row,” Das tells TOI.Venezuela provides India with a second source of heavy sour crude oil that it did not have twelve months ago. But it’s a useful extra leg, not a pillar, says Das.

The final result

Experts point out that Venezuelan crude can be seen as an important diversification rather than a cornerstone for India’s crude supply.So if Venezuelan crude cannot make up for the volume and rate that Russian crude provides, what are the alternatives for India? Where will replacement barrels come from if supplies from Russia are cut off due to possible sanctions and Iran’s oil ban drives up prices?When the United States sanctioned crude from two Russian oil majors late last year, India’s crude imports from Russia fell. A diversified basket of crude oil allowed India to increase its purchases in the Middle East, but Russia remained the largest supplier. India may have finally reduced Russian crude imports further, but with the Middle East war choking off supplies, Russian oil has returned with a vengeance.Naveen Das says the bulk of any Russian deficit would have to come from the Middle East, which is currently unusually absent from India’s basket due to the Strait of Hormuz disruption and has plenty of room to return.As Manas Majumdar of PwC India points out: Before the conflict with Iran, the Middle East (particularly the United Arab Emirates, Saudi Arabia and Iraq) used to be India’s key suppliers.India would therefore look at its diversified sources and take a portfolio approach: increasing imports from the United States, West African producers, Brazil, alternative routes from Saudi Arabia, the United Arab Emirates and of course Venezuela as a component of this.However, as Pankaj Srivastava says, Venezuelan crude could account for almost 10% of India’s roughly 4.5 million barrels per day of crude oil imports, providing valuable diversification and strengthening the country’s crude oil supply security.Overall, Venezuelan crude can complement and diversify India’s crude supply, but cannot independently cover a significant shortfall in Russian supply.Russian crude remains the mainstay of India’s crude supply. In the past, India has not stopped buying it when faced with 50% tariffs. This time, if the Trump administration gets the sanctions bill passed and imposes tariffs, India can still keep its energy security as a primary focus, even as supplies from the Middle East and Venezuela may offer an important cushion.