In a recent challenge to India’s oil import diversification strategy amid rising geopolitical uncertainties, US President Donald Trump has threatened to impose 25 percent “secondary tariffs”, in addition to any existing tariffs, from April 2, on countries such as India and China that import Venezuelan oil.
Trump shared that the 25 percent tariff on buyers of Venezuelan crude would be in addition to any existing levies. As per the executive order published, once applied, the tariffs would remain in place for one year “after the last date on which the country imported Venezuelan oil,” unless the US commerce secretary approved their earlier removal.
In fact, the proven oil reserves in Venezuela were recognized as the largest in the world. The 2019 edition of the BP Statistical Review of World Energy reported the total proved reserves of 303.3 billion barrels for Venezuela (slightly more than Saudi Arabia’s 297.7 billion barrels).
Venezuela’s crude oil is very heavy by international standards, and as a result much of it must be processed by specialized domestic and international refineries.
Venezuela’s development of its oil reserves has been affected by political unrest. In late 2002, nearly half of the workers at the state oil company PDVSA went on strike, after which the company fired 18,000 of them, draining the company of technical knowledge and expertise.
Venezuela was one of the largest suppliers of oil to the US
As of 2006, Venezuela was one of the largest suppliers of oil to the United States, sending about 1.4 million barrels per day.
In October 2007, the Venezuelan government said its proven oil reserves was 100 billion barrels (16×109 m3). When 2015 ended, Venezuela’s confirmed oil reserves were estimated to be around 300.9 billion barrels in total. As a result of the lack of transparency in the country’s accounting, Venezuela’s true level of oil production is difficult to determine.
After the 2014 oil crash, “Venezuela descended into chaos with hyperinflation, severe shortages of most goods, fighting on the streets, and many people fleeing to other countries.” In 2019, it was ranked 151 out of 156 countries in the index of Geopolitical Gains and Losses (GeGaLo).
Venezuela’s oil exports were “expected to net about $2.3 billion” by the end of 2020, whereas a decade earlier the country had been “the largest producer in Latin America, earning about $90 billion a year” from these exports.
In addition to conventional oil, Venezuela has oil sands deposits similar in size to those of Canada, and approximately equal to the world’s reserves of conventional oil. Venezuela’s Orinoco oil sands are less viscous than Canada’s Athabasca oil sands – meaning they can be produced by more conventional means – but they are buried too deep to be extracted by surface mining.
While Venezuela has reported “proven reserves” topping those reported by Saudi Arabia, industry analyst suggested that these numbers reflect variables driven by changes in crude oil market prices—indicating that the percentage of Venezuela’s oil that qualifies as Venezuela’s “proven” reserves may be driven up or down by the global market price for crude oil.
In fact, Venezuela’s oil reserves are largely of “extra-heavy crude oil” which might “not be economical to produce” under certain market conditions.
The lighter crude generally associated with Saudi oil fields is cost-effective to produce under most market-price conditions, and thus is more consistently, and uniformly, part of Saudi Arabia’s “proven” reserves, compared to the more variable usefulness of the Venezuelan oil.
Venezuela’s oil exports were “expected to net about $2.3 billion” by the end of 2020, whereas a decade earlier the country had been “the largest producer in Latin America, earning about $90 billion a year” from these exports.
In addition to conventional oil, Venezuela has oil sands deposits similar in size to those of Canada, and approximately equal to the world’s reserves of conventional oil. Venezuela’s Orinoco oil sands are less viscous than Canada’s Athabasca oil sands – meaning they can be produced by more conventional means – but they are buried too deep to be extracted by surface mining.
The technology needed to recover ultra-heavy crude oil, such as in most of the Orinoco Belt, may be much more complex and expensive than that of Saudi Arabia’s light oil industry.
By comparison, the lighter crude generally associated with Saudi oil fields is cost-effective to produce under most market-price conditions, and thus is more consistently, and uniformly, part of Saudi Arabia’s “proven” reserves, compared to the more variable usefulness of the Venezuelan oil.
A declining trend in oil exports since 1998 is the main concern about Venezuelan oil policy. If the trend in declining oil exports persists, Venezuela will become increasingly dependent on higher oil prices and/or periodic adjustments to sustain its account.
Now, US President Donald Trump announced high tariffs on imports from countries buying Venezuelan oil and gas—a move that could impact India, China, and others while fueling global trade tensions.
“Venezuela has been very hostile to the United States and the Freedoms which we espouse. Therefore, any Country that purchases Oil and/or Gas from Venezuela will be forced to pay a Tariff of 25% to the United States on any Trade they do with our Country,” Trump posted on Truth Social.
Trump further accused Venezuela of “purposefully and deceitfully” sending criminals to the United States, including violent offenders and members of organizations such as Tren de Aragua. Trump has aggressively imposed tariffs on both allies and rivals, using them as a tool to exert economic and diplomatic pressure, since his return to the White House in January.
The newly proposed 25% tariffs on Venezuelan oil, affecting both direct and indirect purchasers, could be implemented from April 2, as per Trump’s signed directive. The implementation decision rests with the secretary of state, who will consult with other US agencies before determining whether to enforce these levies. These tariffs scheduled for April 2, coincides with Trump’s planned announcement of reciprocal tariffs on other nations—a day he calls “liberation day.” In addition to reciprocal tariffs, he has also vowed to impose broad sector-specific duties on imported automobiles, pharmaceuticals, and semiconductors.
The tariffs could impact India and China, as both nations import Venezuelan oil, along with the United States and Spain. Trump confirmed the 25% tariff would be additional to existing rates. The order stipulates that the 25% tariff will cease one year after a country’s last Venezuelan oil import, or earlier at Washington’s discretion.
As per authentic reports, in 2024, India imported 22 million barrels of oil from Venezuela, which made up 1.5% of India’s total crude oil purchases. The nation’s imports increased to above 254,000 barrels per day, representing approximately half of Venezuela’s aggregate oil exports, which totaled nearly 557,000 barrels per day during this period.
In December 2023, India’s crude oil imports stood at roughly 191,600 barrels per day. The distribution amongst companies showed Reliance Industries securing 127,000 barrels per day. Indian Oil Corporation (IOC) obtained 37,000 barrels per day, and the HPCL-Mittal Energy received 28,000 barrels per day.
Last year in February, Venezuela exported approximately 500,000 barrels of oil daily to China and 240,000 barrels to the United States.
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