Bottom Line Up Front

Indian buyers of Venezuelan oil have halted imports due to fears of sanctions. This development has significant implications for both the intelligence community analysts and the financial industry, as it underscores the impact of geopolitical tensions on global energy markets. 

Screeching To a Halt

Indian oil purchasers, notably Mukesh Ambani's Reliance Industries Ltd., have ceased buying oil from Venezuela as the expiration of a sanctions waiver approaches next month. Reliance Industries, a major importer of Venezuelan oil varieties like Merey, has paused new acquisitions to circumvent potential issues if the U.S. chooses not to renew a sanctions waiver beyond its April 18 deadline, according to sources familiar with the matter. The United States ponders suspending the sanction waiver, and canceling the license given to Venezuela to trade crude oil, if the Venezuelan regime fails to hold fair elections, which will take place in April.

The Race

The choice to suspend oil purchase from Venezuela is a shift from trends over the last two years, when India raced ahead of the looming sanction deadline to rapidly increased buying rates. Such buying patterns have been increasing over the past two years, as India reportedly bought products like Venezuelan discounted petroleum coke to produce charcoal. Trade of petroleum products between the two nations followed observable trends of cooling relations in 2019 and the years before the COVID-19 pandemic.

Market Impact


In November 2023, the S&P Global made note of the impact that India buying Venezuela's coal had on the world oil market. Indian refiners making those purchases of Venezuelan crude oil after temporary ease of sanctions, marking a significant shift in the global crude market. This development opens competition with Chinese independent refiners, who have been major buyers of Venezuelan crude in recent years. The United States' recent relaxation of sanctions on Venezuela allows for a six-month period of eased restrictions, potentially renewing if Venezuela adheres to certain political and electoral commitments. This change is poised to alter the dynamics of crude oil trade, with significant impacts on India's crude oil supply sources and refining margins.

"Some Venezuelan crude is now getting loaded and is on its way to India. With Venezuelan crude entering the market, it provides an opportunity for Indian refiners to seize the moment and enhance their sour crude refining margins, thereby boosting overall gross refining margins," said Sumit Ritolia, refinery economics analyst at S&P Global Commodity Insights, as quoted by the S&P Global's web publication.

The Shift's Impact on China

Analysts lauded the lifting of sanctions and the return of Venezuelan crude to the market because, by their calculations, the market surge around Venezuela's trade with India was seen to diversify India's crude oil sources. This, analysts noted, had potential impact on he country's reliance on Russian crude. Likewise, S&P Global noted how the surge of Venezuelan petroleum created tougher market position for China.

The Indian public reportedly welcomed the return of Venezuelan oil to the marketplace. By January of this year, domestic Indian refiners were "joining forces" to begin buying and shipping "robust volumes" of crude products from Venezuela to India, S&P Global wrote. At the start of the year, crude was expected to flow into the region from the Central American regime, however, as sanction renewal draws nearer, what was a shift toward racing to buy is now expected to shift once more.

Whiplash From Looming Sanctions 

The Indian buyers' decision to halt imports of Venezuelan oil is a direct response to growing concerns over potential sanctions. The United States, among other countries, has been imposing sanctions on the Venezuelan government to pressure President Nicolas Maduro's regime. 

These sanctions target Venezuelan oil exports, which have been a crucial lifeline for the cash-strapped nation. As Indian refiners rely heavily on Venezuelan crude, this move highlights the challenging balancing act faced by countries seeking to maintain diplomatic relations while navigating the complexities of global politics and energy markets.

Our Analysis: What the Halt Means For International Relations

The halt in Indian imports of Venezuelan oil signifies the effectiveness of economic pressure as a tool in international relations. It provides valuable insights into the strategies employed by governments to achieve their foreign policy objectives. 

Fallout In Brief: 

  • New sanctions mean disrupted oil shipments and projects, The Hindu Businessline wrote.
  • India has viewed a resumed oil trade with Venezuela as "energy security."
  • The crude trade between India and Venezuela "diverted barrels" from China. Sanctions may shift the flow of these barrels again, opening market opportunity for China to once more buy the oil not going to India. China and India have reportedly struggled to curb fossil fuel usage.

Impact on Foreign Policy

Analysts with The Washington Post noted how the impact of such heavy sanctions will impact American foreign policy. The Biden administration reportedly deliberates a difficult path forward with Venezuela sanctions, as the American government needs and option that does not worsen crisis conditions that are leading to large migration patterns by displaced people from the Latin American region. Stiffer enforcement by the American government could anger Latin American governments, because of the fallout. Additionally, reimposing stiff sanctions could raise United States gas prices.

  • The stakes have led to political debates on whether the Biden administration will "abandon democracy" in Venezuela, in favor of the energy markets. The Council on Foreign Relations noted that Biden's administration had prioritized human rights and democracy protections as leading foreign policy efforts, but had not carried out policy promises with regards to Venezuela.
  • The Council on Foreign Relations analyzed a report by The Wall Street Journal headlined "Biden Is Unlikely to Reimpose Sanctions on Venezuela," emphasizing the direct correlation between U.S. politicians concern for domestic U.S. energy costs, and their direct relationship to the sanctions.
  • The consequence of sanctions, and their corresponding renewal dates, have benefited OPEC+ producers. Bloomberg noted that India has shifted crude oil buying from "illicit oil producers" to the United States.