Indian oil players may see improving margins on higher Venezuelan crude output 

Indian companies have also invested in oil and gas blocks in Venezuela, where dividend payouts have been stalled due to sanctions and project development has remained slow. A normalization of operations could allow dividend recoveries to resume and development activity in these blocks to pick up.

• Indian refiners may benefit from increased access to discounted Venezuelan crude
• Odisha plant can refine heavy Venezuelan oil: Reliance, Naraya Energy, Indian Oil
• Lifting US sanctions may resume dividends, boost Indian investments in Venezuela.

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An increase in Venezuelan crude could work in favour of Indian refiners, some of which are better equipped to process heavier, discounted barrels. Access to cheaper Venezuelan crude has the potential to support higher gross refining margins for domestic refiners, with India importing roughly 400kbd of oil from the country in the past.

There are a select few refiners - Reliance Industries, Naraya Energy, and Indian Oil's Odisha plant - that have capability to process Venezuelan crude, according to analysts . These refiners have a high complexity level, which indicates the ability to process low-value, heavy crude oil into lighter distillates. Not all domestic and international refiners possess these capabilities.

What has happened?

The U.S. captured Nicolás Maduro, the sitting President of Venezuela, who will face a series of charges. Further, U.S. President Trump stated that American companies will invest capital in the country to boost its oil output, indicating higher outflows to global markets.

Venezuela is among the countries with the largest oil reserves (303 billion barrels) in the world. It produced ~0.9 million barrels per day (mbd) in November 2025, compared to 2 mbd in the early 2010s, noted Choice Broking.

What will the implications be?

Additionally, Venezuelan crude is heavy and sour, making it cheaper than benchmark grades. Any easing of sanctions could therefore open up an opportunity for Indian refiners, some of whom are equipped to process this crude.

Indian companies have also invested in oil and gas blocks in Venezuela, where dividend payouts have been stalled due to sanctions and project development has remained slow. A normalization of operations could allow dividend recoveries to resume and development activity in these blocks to pick up.

"Domestic players that have invested in oil and gas blocks in Venezuela, from where dividends are stalled due to sanctions. Accordingly, if sanctions are lifted and operations of the oil industry normalize, the recovery of dividends and progress on the development of these blocks might be possible," said Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings, ICRA.

However, a significant increase in output from Venezuela remains limited due to years of underinvestment by the state-owned oil producing firm PDVSA. According to Choice, in a best-case scenario, the output could increase by 150kbd during 2026, wherein only operational expenditure would be required rather than capital expenditure.

"Meanwhile, further increase in output would only come from the next calendar year, provided there is significant investment done by the oil companies," added the brokerage.

Disclaimer: Moneycontrol is part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.