DR RACHNA K PRASAD
Global energy politics is no longer just about barrels of oil or shipping routes; it is about who controls the currency of exchange and, by extension, the architecture of global finance. China’s experiment with the Petro-Yuan has challenged the dominance of the US dollar in energy trade by leveraging sanctioned regimes to build a parallel ecosystem of discounted energy and critical minerals.
In response, a new India-Venezuela-United States energy triad has emerged as a counterweight. This alignment is deliberate and strategic, designed to dismantle China’s commodity-for-paper strategy and reassert the dollar’s centrality in global energy markets.
Trump’s Energy Doctrine: Strategy Behind the Shock
What many observers dismissed as erratic foreign policy—drone strikes, sudden sanctions, and unpredictable diplomacy—was, in fact, a calculated energy doctrine. The Trump administration sought to reorganize global energy flows to ensure that oil and gas remained priced in dollars.
During Trump’s first term, these impulses were often restrained by traditionalist advisers. In the second term, however, the doctrine has been fully unleashed. A revealing moment came with Trump’s sudden announcement of a trade agreement. At first glance, it appeared abrupt and confusing, but it was no accident. It signalled that Venezuela would replace Iranian and Russian energy, weakening the Sino-Russian axis.
This moment offered the clearest insight into Trump’s intent: India as the refining hub, Venezuela as the supply source, and the US as the architect of a dollar-centric energy order. What looked like improvisation was, in reality, the unveiling of a long-term design.
The doctrine rests on three pillars:
• Neutralising Iran by cutting China’s access to discounted crude
• Decoupling from Russia by reintegrating alternative producers
• Checking China’s expansion by dismantling the arbitrage subsidising its manufacturing base
China’s Commodity-for-Paper Strategy
China’s Petro-Yuan experiment is an audacious attempt to replicate the privilege long enjoyed by the US dollar. By issuing Yuan-denominated paper in exchange for hard commodities, Beijing has constructed a closed-loop system with sanctioned regimes.
- Russia supplies crude and gas in exchange for Yuan
• Iran delivers discounted oil by bypassing Western sanctions
• Venezuela provides heavy-grade crude and a foothold in the Western Hemisphere
• Latin America supplies lithium and silver, traded for Yuan-linked debt
This system allows China to acquire resources at deep discounts, fuelling its manufacturing dominance while conserving hard-currency reserves. For Beijing, it offers resilience against sanctions; for Washington, it represents a structural threat to the global financial order.
India as the Global Refining Hub
India has quietly transformed from a passive energy consumer into the world’s clearinghouse for sanctioned crude. Its refining sector is uniquely capable of processing Venezuela’s heavy-grade oil, which many refineries cannot handle. This technical capability is the bottleneck that determines whether sanctioned energy can re-enter global markets.
The economic incentives are substantial. Studies indicate that shifting toward Venezuelan crude could save India billions compared to Russian imports. More importantly, it elevates India from buyer to producer-investor. With ONGC Videsh’s stakes in Venezuelan fields and Reliance’s refining capacity, India becomes indispensable to the triad.
Without Indian infrastructure, redirecting Venezuelan crude away from China would be impossible. India thus becomes the “Oil Key”, unlocking sanctioned production and channelling it back into dollar-denominated trade.
Filling the Iranian Gap
Iran exports approximately 1.5 million barrels per day, most of it to China. Neutralising this flow without destabilising global prices is the central challenge. Venezuela’s production rebound—from under 500,000 barrels per day to nearly 800,000—offers a viable solution.
Two scenarios define US strategy:
• War and Substitution: If Iranian exports are blocked, Venezuelan output scales up to prevent price spikes that would benefit Russia
• Deal and Market Glut: If Iran returns to dollar-based trade, the combined Iranian and Venezuelan supply crashes prices, starving Russia of revenue
Trump’s sudden trade announcement was a practical step to prepare for both outcomes. By signalling India’s role in absorbing Venezuelan supply, the groundwork was laid for seamless substitution of Iranian barrels.
Encircling China’s Manufacturing Base
The ultimate objective of the India-Venezuela-US triad is economic encirclement. By redirecting Venezuelan and Iranian energy into the dollar system, processed through Indian refineries, the US removes China’s ability to subsidise its manufacturing base.
Forced to pay market prices in a currency it cannot print, Beijing’s production costs rise, eroding export competitiveness. This strikes at the core of Xi Jinping’s economic ambitions. The Petro-Yuan thrives on exchanging paper for hard assets. Deny that mechanism, and the Yuan’s credibility as a reserve currency collapses.
Realignment of Global Energy Power
The India-Venezuela-US energy triad is not merely a trade arrangement; it is a geopolitical weapon. Unlocking Venezuelan production is essential to neutralising Iran and pressuring Russia. India’s refining infrastructure is the bridge that makes this strategy viable.
Trump’s sudden trade announcement was not random. It was the visible tip of a broader strategy to realign global energy flows, isolate China, and restore dollar dominance in energy trade.
Energy politics, ultimately, is about currency and control. China’s Petro-Yuan was a bold attempt to rewrite the rules. The India-Venezuela-US triad is the counterstroke—designed to dismantle that system and reassert dollar hegemony.
By neutralising Iran, substituting Venezuela, and channelling flows through India, the US has crafted a doctrine that isolates China, pressures Russia, and stabilises the dollar’s dominance. Trump’s move was not chaos—it was design.