Trump tariff on Venezuelan oil buyers shakes global market, major refiners pull back

Antonio Maria Delgado, Miami Herald on Mar 26, 2025

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The U.S. announcement that Washington will impose a 25% tariff on any country that purchases Venezuelan oil or gas has quickly made commercial dealings with Venezuela’s oil industry a highly toxic proposition, as some of the South American country’s largest customers begin to signal that they will look elsewhere for crude.

India’s Reliance Industries, the operator of the world’s largest refining complex, along with Chinese refiners and traders, are slowing or halting their purchases of Venezuelan oil, Reuters reported Wednesday. Analysts suggest this shift comes as international oil-industry stakeholders and their respective governments assess the potentially high costs of continuing business with the socialist regime in Caracas.

According to Antonio De La Cruz, director of the Washington-based think tank Inter American Trends, the 25% tariff is a game-changer in Trump’s “maximum pressure” policy on Venezuela. “Previously, enforcing sanctions on Petróleos de Venezuela, PDVSA, rested solely on the U.S. Treasury,” De La Cruz said. “Now, with tariffs in place, compliance responsibility shifts to the governments of countries importing Venezuelan oil. The economic risks associated with these imports suddenly outweigh their benefits.”

Since sanctions were imposed on PDVSA in January 2019, Venezuela had managed to circumvent them by secretly selling crude oil to small independent traders willing to take the risk in exchange for significant price discounts. However, the new tariff has the potential of changing that equation dramatically, De La Cruz said.

President Donald Trump announced Monday that the United States will impose a 25% tariff on imports from any country that buys oil products from Venezuela, saying that the move aims to penalize Caracas’ socialist regime for deliberately sending tens of thousands of criminals to the U.S.

Experts warn that the tariff, set to take effect on April 2, may cause several international companies still operating in Venezuela to reconsider their positions. These companies include Spain’s Repsol, Italy’s Eni, France’s Etablissements Maurel & Prom, and India’s Reliance Industries. Alongside Texas-based Chevron, which is already in the process of withdrawing from the country, these firms account for nearly half of Venezuela’s 900,000 barrels-per-day oil production.

Analysts also believe that the tariff will affect Venezuelan oil exports to China. Caracas has been sending approximately 200,000 barrels per day to China as repayment for massive debts accumulated over the years with the Chinese government.

Juan Fernández, former vice president of planning at PDVSA, estimated that Venezuela has been exporting around 700,000 barrels per day, with 100,000 of that amount allocated for payments for the light crude necessary to blend with its extra-heavy crude to make the oil easier to market. After accounting for oil sent to China as repayment and shares allocated to international partners like Chevron, the revenue flowing to Maduro’s regime currently amounts to approximately $800 million per month at current oil prices.

Cutting off this revenue stream is expected to create severe financial difficulties for the regime. “The economic pressure could be significant enough for Maduro to question whether he can maintain military support,” Fernández said.

De La Cruz said oil income is vital for Maduro’s government, as it provides clean money to launder illicit funds. He argues that the new tariff significantly tightens the international siege on Maduro, potentially causing members of his governing coalition to question whether maintaining his leadership is worth the growing costs.

“The oil money was never used to benefit the Venezuelan people,” De La Cruz said. “It wasn’t allocated to hospitals, pensions or improving living conditions. Instead, it funded Maduro’s inner circle and financed repression. Now, as these funds dwindle and international pressure intensifies, military officials may reconsider whether sustaining Maduro’s leadership is viable.”

Maduro and his second-in-command, Interior Minister Diosdado Cabello, have been accused by the U.S. justice system of leading the Soles drug cartel. The State Department currently is offering a $25 million reward for the capture of each man.

In his proclamation invoking wartime powers to expedite the deportation of Venezuelans believed to be affiliated with the feared Tren de Aragua gang on March 15, Trump linked the group to the cartel allegedly led by Maduro and Cabello.

“This criminal organization is perpetrating an invasion and predatory incursion into the United States, posing a substantial danger,” Trump said. “Tren de Aragua operates in conjunction with Cártel de los Soles, the narcoterrorism enterprise sponsored by the Maduro regime, engaging in heinous crimes, including murder, kidnapping, extortion, and trafficking of humans, drugs and weapons.”