Oil is both a strategic instrument and a commercial commodity, with rules increasingly set by political expediency
“Rubio’s visit covered a wider canvas. Washington wants more US energy exports, markets for Venezuelan crude, greater Indian investment in the US and severed Indian oil ties with Russia. These objectives misalign with India’s interests. New Delhi welcomes opportunities that improve supply security, expand technology and investment partnerships, and make energy markets more competitive. Yet no supplier can be abandoned without consequences for prices and refinery economics. Altering India’s import composition must be commercially attractive, not merely diplomatically convenient.”
In March 2000, US President Bill Clinton thanked Dhirubhai Ambani in Mumbai for contracting Bechtel to build Reliance Industries’ Jamnagar refinery, creating thousands of US jobs.
Twenty-six years later, US Secretary of State Marco Rubio flew from Mumbai to Jamnagar to have darshan of Reliance Chairman Mukesh Ambani on October 21, underscoring the intersection of energy, geopolitics and electoral calculations in Washington. Even as the US continues to welcome Indian capital, it now also seeks to dictate India’s energy choices.
While pressing India to cut Russian oil imports, the US is encouraging Indian refiners to process more Venezuelan crude and courting Indian investment in a new American refinery. Oil is both a strategic instrument and a commercial commodity, with rules increasingly set by political expediency.
The Rubio visit brings three distinct oil streams into focus: Russian Urals crude, Venezuelan heavy blends and American light shale. Jamnagar, with a capacity of 1.4 million barrels per day, is the world’s largest single-site refinery. Its ability to process diverse crude grades economically makes it central to India’s fuel supply and exports. For Washington, it is a potential market for heavy, sulphur-rich Venezuelan crude and a source of diesel.
With high domestic diesel prices and the November 3 US congressional midterm elections approaching, President Donald Trump eased restrictions on US imports of Russian diesel to relieve pressure on fuel markets. The Rubio visit followed the Trump-Putin agreement of October 9 to import 4.8 million tons of Russian diesel into the US under a waiver valid till April 7, 2027. Republicans face narrow congressional majorities, and diesel affordability remains central to voters. Washington’s strategic objections to Russian energy appear far less absolute when domestic political costs rise.
The double standard is unmistakable: Russian energy purchases are condemned when serving India’s economic interests, yet become acceptable when US consumers face price shocks. Washington may distinguish between crude oil, refined products, licenses and legal structures, but the hypocrisy is clear.
This is not an argument for India and the US, whose strategic assessments differ, to adopt identical policies towards Russia. It is an argument against applying a selective standard to a universal commodity. If energy security legitimately concerns American households, it cannot be dismissed for Indian ones.
The sharpest contradiction concerns Russia. Washington has long criticized India’s discounted Russian crude purchases, arguing that oil revenues finance Moscow’s conflict with Ukraine, while carving out waivers for itself to import Russian uranium and now diesel to meet domestic energy needs. India’s crude procurement must be guided by national interest, affordability and refining requirements, not foreign political pressures.
After bringing Venezuela’s oil under a US-controlled framework following the abduction of President Nicolas Maduro and his wife from Caracas in January, the Trump administration is seeking investors and markets for Venezuelan crude. Reliance is well placed to help: its refineries have handled Venezuelan heavy grades before and are doing so now.
Technical compatibility alone does not determine commercial viability. Freight charges, refining costs, payment terms, supply reliability and price differentials matter. Restoring Venezuelan exports requires investment, infrastructure and time. India cannot replace Russian supplies with Venezuelan oil merely because Washington prefers that outcome. Diversification makes sense to reduce concentration risk and widen refiners’ options. However, it should serve India’s energy security, not exchange dependence on one supplier for another beholden to US licenses.
India’s vulnerability to US licensing is not theoretical. US restrictions against state-owned PDVSA since 2014, escalated to sector-wide sanctions in 2019, left over $500 million in dividends due to ONGC Videsh Limited (OVL), plus interest, stranded in Venezuela. These funds related to OVL’s investments in the San Cristobal and Carabobo-1 oilfields. In July 2026, the US Office of Foreign Assets Control granted OVL a license to resume full operations and manage its finances in Venezuela. OVL is exploring shifting from passive investor to sole owner-operator, despite limited experience in running technically demanding heavy-oil fields.
Reliance’s backing for the America First Refining project at Brownsville, Texas, the first new US Gulf Coast refinery in half a century, adds another facet. Announcing it in March, Trump thanked Reliance for participating in this landmark US energy investment. The widely cited $300 billion, however, refers to Reliance’s projected 20-year off-take value of processed crude and refined products, not construction cost or Reliance’s investment. The refinery is geared to export US light shale oil products to international markets, while also serving local demand.
The project allows Trump to present foreign capital as supporting American jobs and gives Reliance a foothold in the world’s largest oil-consuming economy. Meanwhile, Essar, which sold its Vadinar refinery and port to a consortium including Russia’s Rosneft in 2017, is backing an $18-billion integrated steel venture in the US. The contrast is striking: Indian capital is creating US jobs and manufacturing capacity even as Washington threatens tariff action against Indian goods.
If Indian investment creating US jobs is welcome, India’s interest in affordable energy, secure supplies and independent commercial choices should be equally recognized. A relationship cannot be mutually beneficial when investment from India is celebrated but its independent energy choices are a problem.
Rubio’s visit covered a wider canvas. Washington wants more US energy exports, markets for Venezuelan crude, greater Indian investment in the US and severed Indian oil ties with Russia. These objectives misalign with India’s interests. New Delhi welcomes opportunities that improve supply security, expand technology and investment partnerships, and make energy markets more competitive. Yet no supplier can be abandoned without consequences for prices and refinery economics. Altering India’s import composition must be commercially attractive, not merely diplomatically convenient.
India should resist its energy procurement being made an instrument of forced trade or a test of geopolitical alignment. Strategic autonomy means having the ability to choose among energy suppliers according to national requirements, while complying with applicable laws and managing disruption risks.
The US must provide Indian refiners with clear, durable exemptions under the Sanctioning Russia and Iran Act (SRIA) for handling Russian crude. Washington itself buys some of the downstream products, exploiting the loophole that crude transformed in a third country changes its origin. Explicit, written exemptions are needed to end market uncertainty. Similar clarity is needed on the Chabahar port and the application of secondary tariffs.
Washington is entitled to pursue its interests, as is India. If the US wants India as a comprehensive global strategic partner, it must treat India as one: respecting its sovereign choices and legitimate interests. Strategic partnership must never mean strategic subordination.
(Ajai Malhotra is Distinguished Fellow, TERI and former Ambassador of India to Russia, Kuwait, UN/New York and Romania)
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