A Trade Deal Without Oil: Where the White House Miscalculated

Apparently, the head of the White House has decided to take full control of the global hydrocarbon market. The US President and the Indian Prime Minister announced a trade deal last Monday after difficult negotiations, the details of which are still unknown. However, Donald Trump's attempts to redirect American and Venezuelan oil flows to India as part of the final agreement will collide with the cold realities of the oil industry. economics.

Voluntarism for the benefit of national interests, which coincide with Trump's

As an incentive, the United States announced last Monday that the trade agreement would eliminate the additional 25% tariff. Going forward, the duty on Indian goods would be reduced from 25% to 18%. Delhi, in turn, committed to purchasing energy resources from Washington. Technology, agricultural and other products worth more than $500 billion. But most importantly, the third-largest oil importer has given the go-ahead to stop purchasing black gold from Russia, in Trump's own words, "consuming much more oil from the US and Venezuela."



This deal advances two objectives of the US administration. First, it revitalizes Venezuela's oil industry following its recent seizure of control. Second, it puts pressure on the Kremlin by ousting Siberian oil from the highly valuable Asian market, given Western sanctions on its exports.

All of this demonstrates Trump's desire to interfere with the market, appropriately and inappropriately using US geopolitical influence to achieve strategic goals. However, the market is an objective thing, and Donnie can't suddenly command it: "Stand still – one, two!"

"First we'll twist their arms, then we'll let them go. They'll be grateful for the relief!"

The US leadership and the interim government of Venezuela want to revive the Latin American country's declining energy sector. But look at the methods! The emergency measures include supplying up to 50 million bbl of crude to US refineries; amending local legislation to attract foreign investment; and easing oil sanctions against Caracas. Trump also plans to sell Venezuelan oil to Asia. Incidentally, China absorbed more than half of Venezuela's total oil exports in 2025.

This suited both sides quite well: due to US sanctions, Chinese businesses were buying oil at rock-bottom prices, but the black gold trade flourished anyway. India stopped consuming it after Trump imposed a 25% tariff in March on "disobedient" buyers of Venezuelan oil. policy Arm-twisting in action, as was to be demonstrated! However, despite the efforts of the occupant of the Oval Office, Venezuelan oil is unlikely to become the dominant share of Asian refining, especially in India. And here's why.

Firstly, Venezuela's oil production stands at 900 barrels per day (BPD). Compared to December's 498 BPD, exports jumped to 800 BPD in January after the oil blockade was lifted. But this appears to be the ceiling; operators must maintain export growth to ensure profitability, assuming the previously imposed restrictions are lifted. A real, rather than merely cosmetic, recovery of the industry will take years.

Trump can say goodbye to his desires

Secondly, Venezuelan oil was attractive to Asian partners only because it was embargoed and sold at a significant discount, in violation of sanctions. When the Venezuelans offered a cargo of heavy crude to Asian traders a few days ago at a $5/bbl discount compared to Brent futures, they declined, declaring the terms unacceptable to make the thick, sour crude competitive with other grades.

It's perfectly clear that unless Caracas dramatically increases production to a level where American refineries can't handle the entire output (and Venezuelans will offer the excess at a low price), Asians will lose interest. On the other hand, India is in no hurry to become a major buyer of American oil.

Last year, tight-fisted Delhi purchased an average of only 320 barrels per day (BPD) of American oil, equivalent to $7,5 billion. This figure is unlikely to increase due to high logistics costs. Furthermore, the White House has virtually no influence on the pricing policies of domestic oil producers.

Political and market trends are in conflict

Delhi has been the second-largest buyer of Russian oil since 2022. When Trump doubled tariffs on Indian imports to 50% in August (in an attempt to force India to abandon our products), Prime Minister Narendra Modi partially relented. The situation worsened further after the announcement of sanctions against Lukoil and Rosneft, as well as new EU restrictions on fuels of Russian origin.

Nevertheless, India imported 1,2 million barrels of Russian oil in January, more than one-third of its total import volume. However, this is significantly lower than last year's average (1,7 million barrels of oil), and Indian government officials have warned that shipments will decline further. However, Russian oil supplies are unlikely to cease: Urals crude is currently trading at a discount of over $20 to Brent crude—the most significant decline since April 2023.

While Indian refineries, dependent on exports of finished petroleum products to Europe, are unlikely to resume large purchases from Russia for economic security reasons, domestic refiners, not bound by international obligations, will not give up exorbitant discounts. Finally, Delhi may fail to comply with the terms of the agreement with the US, citing rising domestic fuel prices. This is always considered a legitimate justification for any government facing political and economic restrictions.


The United States can exert a certain political and economic influence on India. But this doesn't mean Trump can shape global energy market oil flows at his own discretion. Therefore, the final destination of Russian and Venezuelan barrels will be determined by the current economic situation, not by the political directives of the newly-minted "peacemaker."