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US-Venezuela Tensions Won't Shake India's Oil Security, Says Report

A Bank of Baroda report concludes that renewed tensions between the US and Venezuela pose no immediate risk to India's oil security. It notes Venezuela's current contribution to global oil supply is minimal at just 1%, limiting near-term disruption risks. India's bilateral trade with Venezuela is modest, and its export exposure to the country has been declining. The report further emphasizes that global crude supplies are likely to remain in a glut mode, preventing any upside risk to India's oil import bill.

Key Points: India's Oil Security Unaffected by US-Venezuela Tensions

  • Venezuela's global oil supply share is only 1%
  • India-Venezuela bilateral trade is modest at $1.9bn
  • India's exports to Venezuela have declined by 8.8%
  • Venezuela supplies oil to India at a competitive price
2 min read

US-Venezuela tensions unlikely to impact India's oil security: Report

A Bank of Baroda report finds India's oil imports and trade are secure despite US-Venezuela geopolitical tensions, citing limited global supply risk.

"the current geopolitical tension between US and Venezuela does not pose any immediate risk - Bank of Baroda report"

New Delhi, January 6

The resurgence of geopolitical tensions between the United States and Venezuela is unlikely to pose any significant risk to India's oil security or trade position, according to a research note by Bank of Baroda.

The report noted that despite Venezuela holding a substantial share of global crude oil reserves, its current contribution to global oil supply remains limited: "Venezuela's share in global oil production, CY24, has been only 1 per cent amounting to 960 Million Barrels per day (MBPD)," the report said, adding that "in terms of disruption of global oil supply it poses no immediate risk."

While Venezuela accounts for a large portion of global reserves, the report highlights that supply-side constraints limit near-term implications. "In terms of crude oil reserves, Venezuela's share is high at 19.4 per cent," it said, noting that this has "brought forth conjectures of higher oil supplies if the potential of the reserves can be fully utilised by the US." This expectation has already influenced prices, with crude oil softened in today's trading session.

From India's perspective, the report underlines that bilateral trade exposure to Venezuela remains modest. "From India's perspective, bilateral trade between India and Venezuela is just USD 1.9bn with exports at USD 217mn and imports at USD 1.6bn," it said.

India's export exposure to Venezuela has also weakened over time. The report stated that "on a five-year CAGR basis, exports to Venezuela have declined by -8.8 per cent," even as India's overall exports to the world grew during the same period. Imports from Venezuela, although higher in FY25, do not indicate structural dependence. "Thus no major reliance in terms of imports," the report said.

Crude oil dominates India's import basket from Venezuela. "Petroleum crude and products (POL) occupy the major share in India's import basket from Venezuela, within which crude petroleum is the dominant," the report noted. Importantly, Venezuela supplies oil to India at a competitive price.

But the report says, "among major countries from which India import oil, the unit value of petroleum products for Venezuela is significantly lower.

Summing up the overall impact, the report clearly states that "the current geopolitical tension between US and Venezuela does not pose any immediate risk" to India. It further emphasised that "we do not foresee any upside risk to India's oil import bill as global crude supplies is likely to be in a glut mode."

- ANI

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Reader Comments

P
Priya S
Makes sense. Venezuela's share in our imports is tiny. The real concern is the overall global price volatility, not one supplier. Hope the government continues to secure good deals with Russia and the Middle East.
R
Rohit P
The report says we get oil from them at a lower price. That's the key! As long as it's cheap and doesn't create dependency, it's fine. But we must be careful not to get drawn into their political issues.
S
Sarah B
While the immediate risk seems low, I respectfully think the report could have explored the "what if" scenario more. What if US sanctions tighten further and affect shipping routes or payment mechanisms? A bit more caution is warranted.
V
Vikram M
Our exports to them are declining anyway. Focus should be on boosting trade with stable partners. Good to see data-driven reports like this instead of fear-mongering.
K
Karthik V
The main point is global supply is in "glut mode". That's good news for consumers like us. Petrol prices should stay stable, fingers crossed! 🤞

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