US Sanctions on Venezuela may raise India’s oil prices, increase import costs, and impact the economy. Can India counter the challenge with diversification?
This is an important question because India buys a large amount of crude oil from Venezuela and if the US Sanctions on Venezuela may raise India’s oil prices, increase import costs, and impact the economy. Can India counter the challenge with diversification?, it may impact India’s economy.
Does the US deliberately want to bring down India’s economy?
β‘ It is unlikely that the US’s main objective is to weaken India’s economy. But, indirectly, this move can pose economic challenges for India.
Possible impact on India:
Oil prices may rise
India imports 85% of its oil needs and Venezuela is its major supplier.
If tariffs are imposed on Venezuelan oil, India will have to buy expensive oil.
Expensive oil will increase the price of petrol and diesel, which may lead to inflation and inflation.
Import costs will increase
If oil from Venezuela becomes expensive, India may have to buy expensive oil from Saudi Arabia, Iraq or the US.
This may lead to devaluation of the rupee, which will increase the trade deficit.
US control over the energy market will increase
If India faces problems in buying oil from Venezuela, then India may have to buy LNG (liquid natural gas) or oil from the US.
This may make India more dependent on the US, which may be a part of the US strategy.
Is the US doing this deliberately?
β‘ It is likely that the main objective of the US is not to harm India but to put pressure on Venezuela and China-Russia. But, the US always gives priority to its own benefit and if it affects India, it would care less.
β‘ The US does not want to weaken India, but it also does not want India to become completely self-sufficient and have no influence on the oil market.
What should India do?
- Diversification: India should have the option of buying oil from other countries like Russia, Saudi Arabia, UAE, Brazil and Iran.
- Trade in Rupees: India should try to trade with Venezuela in Rupees, so that the dependence on the dollar is reduced.
- Investment in Renewable Energy: If India focuses more on solar energy, wind energy and hydrogen energy then it can reduce its oil dependence.
The main goal of the US is not to bring down India’s economy but to put pressure on Venezuela and control the global oil market.
But India may be harmed indirectly so India must make its energy policy strong and multilateral.
