Trump announces US takeover of Venezuela’s oil sector: What India stands to gain and what it risks losing | Explained

FILE PHOTO: El Palito refinery of the Venezuelan state oil company PDVSA is pictured, in Puerto Cabello, Venezuela February 10, 2024. REUTERS/Leonardo Fernandez Viloria/File Photo

Donald Trump’s move to capture Venezuela’s leader Maduro has limited immediate impact on India due to reduced trade, but could allow recovery of Indian oil investments and diversify crude sources if US control revives Venezuela’s oil sector, amid diplomatic challenges.

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Donald Trump’ dramatic move to capture Venezuela’s longtime leader Nicolas Maduro has sent shockwaves far beyond Latin America, raising fresh questions about global energy markets, geopolitics, and the ripple effects for major economies like India. While Washington has framed the action as a crackdown on drugs, corruption, and authoritarian rule, it has also openly signalled its intent to take control of Venezuela’s vast oil resources, placing energy and strategic interests firmly at the centre of the crisis.

For India, the developments present a complex mix of limited immediate risk and potential long-term consequences. New Delhi’s direct trade exposure to Venezuela has shrunk sharply over the past few years due to US sanctions, insulating India from short-term economic shocks.

At the same time, the possibility of revived oil production under US oversight, the unlocking of long-stuck Indian investments, and the broader geopolitical implications of regime change have put India in a delicate position. The situation forces policymakers to balance energy interests, diplomatic principles, and strategic autonomy as events in Venezuela continue to unfold.

India’s direct economic exposure is limited

India’s current trade and energy ties with Venezuela are small, especially compared with the past. In the 2000s and early 2010s, Venezuela was one of India’s sources of heavy crude, with imports at times surpassing 400,000 barrels per day.

However, after US sanctions tightened in 2019, Indian refiners stopped buying Venezuelan crude to avoid compliance risks. Trade volumes have since dwindled sharply, with bilateral trade worth just a few hundred million dollars in 2024–25, including a much smaller share of crude imports and limited Indian pharmaceutical exports. India’s total crude imports from Venezuela fell over 80 per cent in recent years, and overall trade is now modest.

The Global Trade Research Initiative (GTRI) says India is unlikely to feel material economic or energy impacts from the crisis. It notes that trade has collapsed due to sanctions and that India’s energy security does not depend on Venezuelan oil at present. “‘India faces negligible impact,’” said GTRI founder Ajay Srivastava, pointing out that low current trade and imports make Indian exposure minimal.

Potential upsides and strategic opportunities

Despite limited direct exposure, some analysts see possible benefits if U.S. control leads to a restructuring of Venezuela’s oil sector:

Recovery of long-pending dues: India’s state-run ONGC Videsh Ltd (OVL) holds stakes in Venezuelan oilfields such as San Cristobal and has nearly USD 1 billion in unpaid dividends and claims frozen due to decades of sanctions and lack of audits. If US oversight allows Venezuela’s oil industry to restart and sanctions are eased, these earnings could be recovered as part of revived operations.

Reviving production: With sanctions lifted, OVL and Indian partners could move rigs and equipment to Venezuelan fields that currently operate at a small fraction of their capacity, significantly increasing output. Venezuelan heavy crude is compatible with Indian refineries, and a revival of exports could diversify India’s supply sources.

Strategic alternative: Analysts note that renewed Venezuelan crude exports might offer India an additional source of heavy crude beyond the Middle East, potentially strengthening its negotiating position in global oil markets and reducing vulnerability to geopolitical shocks.

Political and diplomatic considerations

India has expressed “deep concern” over the US operation and reaffirmed its support for the well-being and safety of the Venezuelan people, reflecting New Delhi’s longstanding stance on sovereignty and non-intervention. India’s Ministry of External Affairs called the conflict a matter of concern and stressed peaceful resolution.

Politically, India must balance its approach between strategic autonomy and global geopolitical pressures. While there may be potential commercial gains from oil and dues recovery, these must be weighed against diplomatic reputational costs and India’s commitment to principles of sovereignty and international law.

Oil markets and prices

In the near term, global oil prices are unlikely to be strongly affected by the Venezuelan developments because global oil markets remain oversupplied and India does not currently import significant volumes from Venezuela. However, over the long run, if US control leads to increased exports and global supply expansion, prices could see downward pressure, potentially benefiting oil-importing countries like India indirectly.