USA President Donald Trump introduced on Monday a 25 p.c tariff on imports from any nation buying oil or gasoline from Venezuela, together with new tariffs concentrating on the South American nation itself. India, one of many largest importers of crude oil, is among the many nations that might be considerably affected by this transfer.
What Occurred
India’s tariff challenges are set to escalate following US President Donald Trump’s announcement on March 24 concerning new tariffs on nations buying oil and gasoline from Venezuela. Trump acknowledged that beginning April 2, the US will impose a further 25 p.c tariff on nations shopping for oil from the Latin American nation, impacting each direct and oblique oil patrons.
Impression on India
The brand new tariffs might have an effect on each China and India, as Venezuela exports oil to those nations, together with america and Spain. In February, Venezuela exported roughly 500,000 barrels of oil per day to China and 240,000 barrels to america, in keeping with specialists.
Final 12 months, India imported 22 million barrels of oil from Venezuela, representing simply 1.5 p.c of its complete crude oil purchases. Notably, in December 2023 and January 2024, India turned the highest purchaser of Venezuelan crude, importing 191,600 barrels per day and 254,000 barrels per day, respectively. In January 2024, India accounted for practically half of Venezuela’s complete oil exports.
Listed here are a number of oil and gasoline shares that might be impacted by these developments:
1. Oil & Pure Gasoline Company Ltd
With a market capitalization of Rs.3.14 lakh crore, the share worth of ONGC Ltd closed at Rs.241.71 per share on Tuesday, falling 1 p.c from its earlier shut.
ONGC Ltd, India’s state-owned oil exploration and manufacturing firm, might face oblique penalties from the US tariff coverage. Though ONGC doesn’t instantly import Venezuelan crude, its subsidiary, ONGC Videsh, holds stakes in Venezuelan oil fields. If Venezuela experiences decreased export revenues on account of sanctions and tariffs, these investments might face operational challenges.
Moreover, ONGC’s home operations is likely to be affected by rising international crude oil costs, as provide constraints ensuing from the tariff might drive up prices.
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2. Indian Oil Company Ltd
With a market capitalization of Rs.1.85 lakh crore, the share worth of Indian Oil Company Ltd closed at Rs.130.90 per share on Tuesday, falling 2 p.c from its earlier shut.
Indian Oil Company Ltd (IOC), India’s largest public-sector refiner and gas marketer, is prone to be considerably impacted by the 25% tariff on Venezuelan oil. Regardless of diversifying its crude sourcing, IOC nonetheless depends on reasonably priced choices like Venezuelan crude to handle prices. The tariff will increase the price of Venezuelan oil, resulting in increased refining bills and potential provide chain disruptions.
As a significant gas provider in India, IOC might face challenges in sustaining aggressive pricing whereas managing shrinking margins. The corporate may have to hunt various crude sources or renegotiate provider contracts.
3. Reliance Industries Ltd
With a market capitalization of Rs.17.44 lakh crore, the share worth of Reliance Industries Ltd closed at Rs.1,285.25 per share on Tuesday, falling 1.3 p.c from its earlier shut.
Reliance Industries Ltd (RIL), one in all India’s largest personal refiners, might face vital challenges because of the 25 p.c tariff on Venezuelan oil imports. Traditionally, Reliance has sourced crude from Venezuela to optimize refining margins, as Venezuelan oil is commonly priced decrease than international benchmarks. The brand new tariff will increase the price of importing this oil, probably lowering profitability in its refining section.
Moreover, increased enter prices might power Reliance to go on the elevated bills to customers, affecting home gas costs and demand. This might additionally harm its petrochemical enterprise, which depends on reasonably priced crude oil derivatives for manufacturing.
Written by – Siddesh S Raskar
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