Pressure to stop oil from Russia could cause huge economic and strategic damage to India’s interests.

New Delhi. Discussions on a trade agreement between India and the United States are in full swing. As recently announced, India and the United States agreed on an interim agreement that reduces Indian tariffs on American goods, and the United States hopes to encourage India to reduce its oil purchases from Russia and increase its purchases from Venezuela for its energy needs.

Logistics and Costs
It takes an average of 36 days for oil to reach India from Russia, compared to 54 days from Venezuela. The increased distance will result in an additional cost of approximately $2 per barrel. Furthermore, Venezuela’s production is approximately 1 million barrels per day, while India used to import 1.6 million barrels daily from Russia. This means that Venezuela alone cannot replace Russia’s supply.

Refining Challenges
India’s private refineries (such as Reliance Jamnagar and Nayara Energy) can process Venezuelan heavy oil and generate profits. However, state-owned refineries are primarily designed for Russian and Middle Eastern oil. They will not be able to efficiently refine Venezuelan oil, potentially leading to significant losses for state-owned companies.

Geopolitical implications:
If India stops buying oil from Russia, China could emerge as a major customer, strengthening the Russia-China alliance. This could pose a challenge to India’s security and strategic interests.

Impact on Defense and Investment:
India pays Russia in rupees for oil, which gives Russia a large pool of funds to invest in India. If India stops buying oil, this mechanism could collapse and investment plans would be affected.

US Objectives and Agricultural Protests
The US wants India to avoid Russia and buy oil from Venezuela, which will benefit US oil companies. The reduction in US tariffs under the agreement appears beneficial for India, but farmers fear that imports of US dairy and other agricultural products could jeopardize their livelihoods. India faces a challenging balance between trade pressures from the US and the European Union.

Expert Opinion:
Elizabeth Roche (OP Jindal Global University) says that India could look to the US and European countries for defense, but the oil issue could have a major impact on relations with Russia and the strategic balance. According to Reshmi Kazi (Jamia Millia Islamia), Venezuela’s production capacity is limited, and logistics and cost make this option practically challenging.