US-Venezuela conflict: Crude shock worries grow worldwide, but India looks insulated — here's why

US President Donald Trump has sent shockwaves around the world by ordering airstrikes on Venezuela and capturing its president, Nicolás Maduro, on charges of narco-terrorism and drug trafficking. With Venezuela holding the largest oil reserves in the world, the situation raises questions about how India will be affected by this US action in the South American nation.

The economic think-tank Global Trade Research Initiative (GTRI) believes that the impact on the Indian economy from the US-Venezuela conflict will be negligible.

"India faces negligible impact, as trade with Venezuela has collapsed under sanctions, with crude imports down 81.3 per cent in FY2025 and overall bilateral trade remaining marginal," GTRI founder Ajay Srivastava told PTI.

India-Venezuela trade history

In the 2000s and 2010s, India imported vast amounts of crude oil from Venezuela, more than 400,000 barrels every day at the peak of this trade. But since the US sanctions on the country in 2019, volumes have dropped sharply, as India cut oil imports and scaled back commercial activity to avoid secondary US sanctions, Srivastava said.

India's total imports from Venezuela were $364.5 million in FY2025. Of this, $255.3 million was for crude oil, which is 81.3% less than $1.4 billion in crude imports in fiscal year 2024.

Exports to Venezuela were only $95,3 million, including pharmaceuticals worth $41.4 million.

"Given the low trade volumes, existing sanctions constraints, and the large geographical distance, the current developments in Venezuela are not expected to have any meaningful impact on India's economy or energy security," PTI quoted Srivastava.

Venezuela holds about 18% of the world's oil reserves, more than Saudi Arabia (around 16%), Russia (about 5-6%), or the United States (around 4%).

India can actually gain from US control on Venezuelan oil: Report

A US-led takeover of Venezuela's oil sector could have a positive impact on India, as per industry sources and analysts PTI spoke to.

Such a move could potentially unlock around $1 billion in long-pending dues for India. Moreover, crude production in Venezuelan oil fields where India has a stake could be revived under US leadership.

India's ONGC Videsh Ltd (OVL) has a 40% stake in the San Cristobal oilfield in the eastern part of the country. However, US sanctions have blocked its access to crucial technology, services, and equipment, thus stranding otherwise commercially viable reserves.

Venezuela has not paid OVL $536 million in dividends up to 2014, as well as a similar amount for subsequent years, as the country refused to permit audits, freezing India's claims.

Once sanctions are eased, OVL can relocate rigs and other equipment from ONGC's oil fields in Gujarat to San Cristobal to revive output, which has plummeted to 5,000-10,000 barrels per day, officials familiar with the matter said.

The onshore field can produce 80,000-1,00,000 bpd with more wells and better equipment, they said, adding that San Cristobal needs rigs similar to those operating in Gujarat, and ONGC owns many such rigs.

(With PTI inputs)