The US takeover of Venezuela’s oil sector may reshape global energy markets. Learn what it means for oil prices and India’s imports.
New Delhi: In a dramatic move that has shaken global politics and energy markets, US President Donald Trump announced on January 3 that the United States will take control of Venezuela’s massive oil reserves. The announcement followed a US military operation that led to the capture of Venezuelan President Nicolás Maduro, marking a major escalation in Washington’s approach toward the oil-rich South American nation.
US Military Action and Maduro’s Arrest
The announcement came after overnight operations by US Special Forces inside Venezuela. The operation reportedly involved strikes on military bases and alleged drug-trafficking boats, triggering widespread power outages in parts of Caracas.
US forces captured President Nicolás Maduro near a safe house and flew him to New York to face trial in federal court on narco-terrorism charges. Authorities also detained his wife, Cilia Flores, on related drug charges.
President Trump said the US would temporarily “run” Venezuela until a stable political transition takes place. During this period, major American oil companies would step in to rebuild Venezuela’s broken oil infrastructure.
Venezuela’s Oil Wealth and Years of Decline
Venezuela holds the world’s largest proven oil reserves, estimated at 303 billion barrels, accounting for nearly 20% of global reserves. Despite this enormous wealth, the country’s oil production has collapsed.
Production has fallen to about 1 million barrels per day (bpd)—just 0.8–1% of global output—down from more than 3 million bpd before 2013. This sharp decline is the result of long-term US sanctions, poor economic management under the Maduro government, and severe underinvestment in oil facilities.
Oil infrastructure across the country is in poor condition. Equipment and technology needed for repairs were blocked by sanctions for years.
US Oil Companies to Lead Revival Efforts
President Trump said American companies, including Chevron and ExxonMobil, would invest billions of dollars to revive Venezuela’s oil sector. Chevron already produces around 25% of Venezuela’s current oil output.
According to energy experts, restoring full production could cost around $58 billion and may take 5 to 10 years. These investments would be recovered through future oil revenues. Access to modern equipment and technology—previously restricted—will be critical for recovery.
Impact on Global Energy Markets
If successful, the US takeover could reshape global oil markets. Venezuela produces heavy, sour crude, which is ideal for refineries that make diesel, asphalt, and heavy fuels—especially in the United States.
Due to sanctions, much of Venezuela’s oil in recent years has been exported to China. A US-led revival could redirect these supplies back to Western markets. This could increase global oil supply and put downward pressure on prices, which are currently below $60 per barrel.
Short-Term Calm, Long-Term Uncertainty
In the short term, analysts expect limited market impact. Global oil supplies are already comfortable, demand growth is slow, and electric vehicles are reducing long-term oil consumption. OPEC+ has also indicated it will not change production levels due to the Venezuela situation.
However, in the long run, a successful recovery could be a game-changer, boosting output and profits for Western oil companies. At the same time, Venezuela’s oil has high carbon emissions, which may discourage climate-focused investors, especially in Europe.
There are also geopolitical risks. Resistance from Maduro loyalists and internal unrest could disrupt operations and delay progress.
Global Political Reactions
International responses have been sharply divided.
- Mexico and Brazil condemned the move, calling it an invasion.
- Russia and China criticized the US for violating Venezuela’s sovereignty and engaging in hegemonic behavior.
- Argentina’s President welcomed the action, calling it a step toward “freedom.”
Within the United States, Democratic leaders questioned the legality of the operation, comparing it to past US interventions in Iraq and Panama.
What This Means for India
For India, the world’s third-largest oil consumer, the immediate impact is limited. India imports more than 88% of its crude oil, but trade with Venezuela has already collapsed due to sanctions.
In FY2025, India’s crude imports from Venezuela fell by 81.3%, making short-term disruption minimal. However, a lifting or easing of sanctions could bring major long-term benefits.
Recovery of India’s Stuck Investments
India could recover nearly $1 billion in unpaid dues, mainly from ONGC Videsh’s investments in Venezuela. ONGC Videsh owns:
- 40% stake in the San Cristobal oil field
- 11% stake in the Carabobo project
Current production at San Cristobal is just 5,000–10,000 bpd, but with US equipment and technology, output could rise to 80,000–100,000 bpd.
Other partners include Indian Oil Corporation, Oil India Ltd, Repsol, and Petronas. Operations have been stalled due to the lack of approvals from the US Office of Foreign Assets Control (OFAC).
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Resumption of Crude Imports to India
India imported $1.76 billion worth of Venezuelan crude in 2024 before sanctions stopped shipments. If trade resumes, Indian refiners stand to gain.
Companies like Reliance Industries, which earlier had a 15-year contract for 400,000 bpd, and Essar are well-equipped to process Venezuela’s heavy crude. This would reduce India’s dependence on Middle Eastern oil and strengthen its negotiating position globally.
Trade and Pharma Sector Gains
Bilateral trade between India and Venezuela fell sharply—from $5.728 billion in FY2019-20 to $2.79 billion. A revival could boost Indian exports of refined petroleum, machinery, pesticides, and pharmaceuticals.
In the pharmaceutical sector, Indian companies already have a strong presence. Cipla supplies medicines to nearly half of Venezuela’s AIDS patients, while Sun Pharma, Dr Reddy’s, Glenmark, and Claris also operate there. Over 120 Indian drugs are approved in the Venezuelan market.
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