New Delhi: Renewed geopolitical tensions between the US and Venezuela do not pose any immediate risk to global oil supply or India’s oil import bill, according to a research note released by Bank of Baroda (BoB) on Tuesday. The bank pointed out that Venezuela’s share in global crude oil production remains marginal at around 1 percent, despite the country holding nearly 19 percent of the world’s proven oil reserves, limiting its ability to disrupt markets in the near term.
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BoB said that while Venezuela produced about 960 million barrels per day in calendar year 2024, prolonged underinvestment and sanctions have constrained output growth. As a result, any meaningful ramp-up in production would take time, even if geopolitical conditions improve.
Echoing this assessment, rating agency ICRA said potential easing of US sanctions and renewed investment in Venezuela’s oil industry could be positive for global oil markets over the medium term. Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings at ICRA, said Venezuela currently accounts for just 0.8 percent of global production, despite holding 18 percent of global oil reserves.
“Investments in the oil industry and ramp up of production could take years but can possibly lead to significantly higher supplies, thereby easing the oil markets,” Vasisht said. He added that Venezuelan crude is typically heavy and sour, making it cheaper and suitable for many Indian refineries that are equipped to process such grades.
ICRA also noted that Indian companies have existing investments in Venezuelan oil and gas blocks, where dividend payouts remain stalled due to sanctions. A normalisation of operations could enable recovery of dividends and renewed progress on asset development, Vasisht said.
Oil prices rose on Tuesday as markets weighed expectations of ample global supply against uncertainty around Venezuelan crude output following recent US actions involving President Nicolas Maduro. Brent crude futures gained 46 cents, or 0.74 percent, to USD 62.22 per barrel, while US West Texas Intermediate rose 41 cents, or 0.7 percent, to USD 58.73 by 1407 GMT.
According to a Reuters report, the administration of US President Donald Trump is expected to meet US oil executives this week to discuss steps to boost Venezuelan oil production.
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From India’s perspective, BoB said bilateral trade with Venezuela remains modest at around USD 1.9 billion, with imports of USD 1.6 billion and exports of USD 217 million. Petroleum crude and products dominate India’s imports from Venezuela, and their unit value is among the lowest compared to other major suppliers, reinforcing the possibility of cost advantages if sanctions are lifted.
