RIL, Nayara in US tariff crosshairs on exposure to Russia and Venezuela

India may run a $36 billion trade surplus with the US but incurs a trade deficit in energy, according to the Indian government data

Marquee Indian energy companies led by Reliance Industries and Russian Rosneft-run Nayara Energy are exposed to the tariff policies of American President Donald Trump because of their purchases of discounted crude oil from Russia and Venezuela and sizable export revenues from fuel sales to the United States (US). 

 

Trump on April 2 announced a 10 per cent across-the-board tariff on imports from all nations, and in addition imposed reciprocal tariffs on countries that run huge trade surpluses with the US. For India, the import tax was 26 per cent, half the 52 per cent that the Trump administration said was the average tariff charged by India on US products.

 

Neighbouring China got 34 per cent, and, after including the existing 20 per cent, it totals 54 per cent.

 

Reliance and Nayara may get a reprieve for now, thanks to lobbying by the American Petroleum Association, which left out energy from the tariff list.

 

Crude oil, refined products, and gas imports have been exempted from reciprocal tariffs because Trump wants to protect domestic pump prices, said Singapore-based energy expert Vandana Hari, offering a lifeline to India’s exports of petroleum products worth $5 billion — around 7 per cent of India’s exports to the US. Hari expects the exemption on energy products to continue.

 

The tariffs appear to contain exemptions for energy, but the scope of that remained unclear till late Wednesday, said Energy Intelligence, based in the United Kingdom. The White House has worded it exemption “for energy and critical minerals that are not available in the United States”. Analysts said technically speaking petrol and diesel were produced in the US. The White House has not given an official clarification.

 

“Since India does not export electricity or significant energy commodities like coal, oil, or gas to the US, the direct impact of these tariffs on its energy sector is negligible,’’ said Sambitosh Mohapatra, leader, ESG/Climate & Energy, PwC India. 

 

Reliance exposure

 

Reliance Industries has typically reported gross refining margins much higher than benchmark Singapore levels or those of state refiners because of the advanced configuration of its Jamnagar refinery, which produces 1.36 million barrels per day and which has the ability to blend and process dirty, acidic oil from Venezuela or Canada. In addition, it is able to export fuels profitably from its plant to Europe and the US by processing discounted oil like Russian Urals.

 

India exports mainly gasoline, gasoline blends, and jet fuel to the US. Reliance made up 91 per cent of the shipments of 67,000 bpd (barrels per day) of fuel exports to the US in 2024, the ship-tracking data showed. Nayara’s share was around 5 per cent. This year Reliance accounted for 91 per cent of the 23,000 bpd in exports and state-oil companies made up the rest, the Kpler data showed.

 

But Reliance might be slowly losing both its export and sourcing advantages from Trump’s tariff policies. Trump imposed a 25 per cent secondary tariff on countries importing Venezuelan oil from Thursday, and threatened 25-50 per cent on countries importing Russian crude oil if Moscow did not advance peace talks in Ukraine.

 

“If implemented, the likes of India, China, Hungary, Slovakia and other countries in continental Europe might just end up with a stark choice between the convenience and cheapness of Russian oil or access to American markets,” said London-based broker PVM. Reliance did not comment on the tariff issue.

 

Reliance imported Russian oil of a record of 600,000 bpd in March, and that was 32 per cent of India’s Russian oil imports and 48 per cent of the oil Jamnagar processed last year; and Nayara accounted for 15 per cent of Russian oil imports, according to the data from market intelligence agency Kpler. Reliance’s Russian sourcing surged after it grabbed a 500,000 bpd term-contract deal from Rosneft for 2025.

 

The impact of heavily discounted dirty Venezuelan oil on Reliance is marginal — last year Reliance made up 84 per cent, or 59,000 bpd, of the 70,000 bpd India imported from Venezuela, a fraction of the 334,000 bpd it imported in 2015 and 212,000 bpd in 2019, before Washington’s sanctions came into force. Nayara used to source Venezuelan oil prior to the sanctions.

 

India’ trade deficit

 

India may run a $36 billion trade surplus with the US but runs a trade deficit in both fuels and overall trade in energy, according to the Indian government data. It imports more oil and gas from America than it exports in the form of petrol, jet fuel, or diesel.

 

India runs a trade deficit of around $7.5 billion in trading in oil and gas with the US, according to Business Standard calculations based on the Customs data.  If one includes other energy imports like petroleum coke, a carbon-rich material used as fuel in cement units, power plants, and coal, the energy trade deficit with the US is $12-13 billion.

 

Indian companies exported 5.1 million tons of fuels, valued at $4.4 billion, but imported 7.86 million tons of crude oil from the US and 13.7 million tons of petroleum products, valued at $5.4 billion and $3.9 billion respectively, in 2024, according to the Customs data. In addition, it imported around $2.6 billion of liquefied natural gas from the US, around $1 billion of petroleum coke, and $4 billion of coal during the period, the data showed.