The United States wants India to buy more Venezuelan oil. India has the refining capacity, Venezuela has some of the world’s largest oil reserves, and Washington sees Indian demand as a potential route to expanding the market for Venezuelan crude under US oversight.
But the proposal faces a basic commercial problem: having the ability to refine a particular grade of oil does not mean buying it makes economic sense.
US Secretary of State Marco Rubio’s visit to Reliance Industries’ Jamnagar refinery complex on October 21 brought this tension into focus. Rubio described India as a “refining superpower” and argued that only a limited number of facilities worldwide can process Venezuela’s exceptionally heavy crude.
For India, however, the decision involves more than diplomatic relations with Washington. Refiners must compare the delivered cost of Venezuelan crude with competing supplies, assess the technical requirements of their facilities and ensure that additional purchases generate sufficient returns.
The issue also intersects with US pressure on India to reduce its dependence on Russian oil. New Delhi must decide whether expanding Venezuelan imports offers a genuine commercial advantage or risks turning its energy procurement into an instrument of American geopolitical policy.
1. Why does the US want India to buy more Venezuelan oil?
Washington wants to establish a larger market for Venezuelan crude as production is expected to increase under US oversight. India is an attractive potential buyer because it imports substantial quantities of crude oil and operates sophisticated refineries capable of processing difficult grades.
Reliance Industries is central to this strategy. Its Jamnagar complex has a combined crude-processing capacity of around 1.4 million barrels per day and is among the world’s most complex refining facilities.
Rubio argued that India and Reliance could help diversify global energy supplies away from regions vulnerable to conflict. He told The Indian Express:
“The whole world is interested in diversifying how we get energy. I don’t think we want a world in which an overwhelming amount of the global energy comes from one part of the world that is prone to conflict.”
He also highlighted the limited number of refineries capable of processing Venezuelan heavy crude, pointing to facilities on the US Gulf Coast and in India.
The American objective is therefore twofold: expand the market for Venezuelan oil and encourage India to increase purchases from a source Washington wants to develop.
However, Washington’s strategic preference does not automatically translate into a commercially attractive deal for Indian refiners.
2. What makes Venezuelan crude difficult to process?
Venezuela’s flagship Merey crude is extremely heavy and highly sulphurous. Its physical and chemical characteristics mean that it cannot be processed as efficiently or economically at every refinery.
Refineries require specific configurations and processing equipment to handle different crude grades. Facilities designed to process lighter oil may face technical limitations or additional costs when handling very heavy crude.
Reliance’s Jamnagar complex is particularly well suited to processing Venezuelan oil because of its sophisticated configuration. Other Indian refiners, including Indian Oil, Hindustan Petroleum and Nayara Energy, may also provide some additional demand.
But this does not mean all Indian refining capacity can absorb large volumes of Venezuelan crude.
Abu Dhabi-based energy analyst Natalia Katona told The Indian Express that refining capacity and price competitiveness were the two major challenges facing an expansion of Venezuelan oil imports.
This is the first constraint: the number of suitable refineries limits the potential market, even when the importing country is one of the world’s largest crude buyers.
3. Why can discounted Venezuelan oil become expensive?
The second constraint is the cost of transporting the crude to India.
According to Katona, Venezuela’s Merey grade was being offered at a discount of around $25 per barrel to Brent, the international benchmark. But freight to India’s west coast was costing approximately $35 per barrel.
That creates a substantial problem. A discount at the point of sale does not necessarily translate into a discount when the oil reaches the refinery.
Illustrative calculation based on the figures cited by Katona:
– Discount to Brent: $25 per barrel
– Freight to India’s west coast: $35 per barrel
– Freight exceeding the discount: $10 per barrel
On these figures, freight alone more than eliminates the quoted discount, creating a $10-per-barrel premium relative to Brent before other costs and crude-quality adjustments are considered.
This is not a complete landed-cost comparison. Insurance, financing, processing costs and the relative value of the crude’s refined products would also affect the final economics.
Shipping scale matters, too. Katona said transporting Venezuelan crude on vessels smaller than very large crude carriers (VLCCs) was hardly economical at the prevailing freight rates.
The implication is straightforward: Venezuela could offer a sizeable headline discount, yet Indian refiners might still find competing supplies more attractive once transportation and other expenses are included.
4. Has India already increased Venezuelan oil imports?
Yes. According to the figures cited in the report, India had already substantially increased its Venezuelan crude purchases after the West Asia crisis began.
Imports rose from virtually zero before the increase to a peak of 350,000 barrels per day in August 2026, before easing to around 200,000 barrels per day in September.
India’s purchases during April-August 2026 were valued at $3.5856 billion, according to the Global Trade Research Initiative (GTRI).
Reliance accounted for 74.3% of these imports, equivalent to approximately $2.66 billion. The remaining purchases included:
– Indian Oil’s Paradip facility: $421.3 million, or 11.7%.
– Mundra storage terminals operated by HPCL and others: $405.8 million, or 11.3%.
– Nayara Energy’s Vadinar facility: $95 million, or 2.7%.
These figures show that a market for Venezuelan crude already exists in India, with Reliance accounting for the overwhelming share of purchases.
The question is how much further those imports can grow without weakening commercial returns or running into technical and logistical constraints.
5. Can Venezuelan oil replace Russian crude?
Not on a like-for-like basis, according to the analysis cited in the report.
Russian Urals crude differs from Venezuela’s Merey grade and is more compatible with India’s broader refining infrastructure. Replacing large Russian volumes with Venezuelan supplies would therefore involve more than changing the country listed on an import contract.
The scale of the existing Russian trade also matters.
India imported 1.9 million barrels per day of Russian crude in September 2026, accounting for more than 35% of its total oil imports that month, according to tanker data from Kpler cited in the report.
Russian imports had reached an all-time high of 2.8 million barrels per day in July, when they accounted for more than half of India’s oil imports.
Against those volumes, Venezuelan imports of around 200,000 barrels per day in September remained comparatively small.
Venezuelan crude can diversify India’s import basket, but the difference in volumes and refinery compatibility makes it an unlikely substitute for a substantial portion of Russian supplies in the near term.
6. Why could West Asian oil limit Venezuela’s opportunity?
Geography gives West Asian suppliers an important advantage in the Indian market.
Oil from Iraq and other regional producers can reach India’s west coast along shorter shipping routes than Venezuelan crude. As supplies from West Asia gradually return to the market, Indian refiners may have access to more competing grades at lower transportation costs.
A Venezuelan barrel must therefore compete not only with Russian oil but also with crude from geographically closer suppliers.
Even when Venezuelan crude is discounted, the final comparison depends on the delivered price, refinery compatibility, product yields, payment conditions and reliability of supply.
For Indian refiners, a shorter shipping route can be commercially significant because freight costs directly affect the cost of each imported barrel.
This competition could restrict further growth in Venezuelan imports even if Washington encourages India to buy more.
7. Is the US linking Venezuelan oil to India’s Russian oil purchases?
The two issues overlap strategically, but India has a strong reason to assess them separately.
Washington wants a larger market for Venezuelan crude while also pressing India to reduce its dependence on Russian oil. New Delhi, meanwhile, needs to maintain reliable supplies at competitive prices.
GTRI has argued that India should distinguish between increasing Venezuelan imports and reducing Russian purchases.
Analyst Natalia Katona also urged India to approach Washington’s proposal pragmatically, using it to diversify supplies without committing to cut Russian purchases.
The distinction matters because the commercial case for buying more Venezuelan oil is independent of whether India reduces its Russian imports. A purchase makes sense only if its price, quality, transportation costs and supply terms are competitive.
Washington’s own position on Russian energy has also shown flexibility in response to supply concerns. The report notes that the US waived potential tariffs of up to 100% on major buyers of Russian energy, including India, as it sought to prevent further pressure on global energy prices.
GTRI has called on Washington to explain why US energy needs can justify Russian purchases while India is expected to reduce its dependence on Russian supplies.
8. What should India demand before committing to more Venezuelan oil?
India can use Washington’s interest in its refining capacity to seek clear commercial terms rather than make commitments based primarily on geopolitical considerations.
Before increasing purchases substantially, Indian refiners would need to assess:
– Competitive pricing: Whether Venezuelan crude remains attractive after freight, insurance, financing and processing costs.
– Reliable supply: Whether production and export volumes can be sustained over the duration of a contract.
– Refinery compatibility: How much additional Merey crude each facility can process without costly adjustments.
– Shipping economics: Whether large-vessel transport and logistics can reduce the cost per barrel.
– Payment arrangements: Whether transactions can be completed on predictable and commercially acceptable terms.
– Long-term commitments: Whether any proposed investment or purchase obligation offers sufficient returns if market conditions change.
– Energy flexibility: Whether additional Venezuelan imports can coexist with India’s existing Russian and West Asian supply arrangements.
These considerations are particularly important because oil prices, freight rates and geopolitical restrictions can change faster than long-term procurement commitments.
India’s ability to diversify suppliers is an advantage only if diversification does not unnecessarily increase costs or create new supply vulnerabilities.
Refining capacity is not a blank cheque
Rubio’s pitch highlights India’s importance in the global oil market, but it also exposes the limits of using refining capacity as a geopolitical bargaining tool.
Reliance’s Jamnagar complex can process Venezuelan heavy crude, and India has already increased purchases substantially. Yet refinery compatibility, high shipping costs, competition from Russian supplies and the shorter routes from West Asia constrain the scope for further expansion.
The commercial calculation is more important than the diplomatic pitch. India can buy more Venezuelan oil if the economics justify it, but replacing Russian crude simply to meet a US preference would be a different proposition.
The central question for New Delhi is not whether it can refine Venezuelan oil. It is whether additional purchases offer better value, reliable supply and greater energy security than the alternatives.