Friday World – January 4, 2026
On January 3, 2026, the U.S. military operation in Venezuela, which resulted in the capture of President Nicolás Maduro, has triggered massive turbulence in global oil markets. The biggest impact is being felt by India, one of the largest buyers of Venezuela's heavy and discounted crude oil.
Indian refineries – particularly Reliance Jamnagar (the world's largest) and Nayara Energy – are specially designed to process high-sulfur, heavy crude grades like Venezuela's Merey and Boscan. These crudes are ideal for producing high-margin products such as petrol, diesel, and jet fuel.
With Venezuelan supplies now completely halted due to the invasion and subsequent chaos, India is facing an immediate daily shortfall of approximately 600,000 barrels of crude oil. To bridge this gap, Indian oil companies will have to turn to more expensive light sweet crudes from the Middle East (Saudi Arabia, UAE, Iraq) and Canada.
This shift is expected to increase refining costs significantly, as these lighter crudes yield lower margins for complex refineries optimized for heavy feeds. In the medium term, this could put upward pressure on domestic petrol and diesel prices. India's Heavy Dependence on Venezuelan Crude
In 2024, India imported 22 million barrels (roughly 600,000 barrels per day on average) of crude from Venezuela, despite U.S. sanctions. The oil was purchased at steep discounts, providing substantial savings for Indian refiners.
Venezuelan heavy grades are particularly well-suited to India's complex refineries, allowing higher yields of valuable middle distillates and better overall profitability. Major Blow to ONGC Videsh
India's state-owned ONGC Videsh has significant upstream investments in Venezuela's Carabobo and Orinoco Belt projects. Due to years of sanctions and now the ongoing military disruption, approximately $600 million of the company's investments remain stuck and at serious risk.
Recovery of these funds could take years, or in the worst-case scenario, result in a complete write-off. **Pivot to Russian Urals Crude
Anticipating tighter U.S. policy under the second Trump administration, Indian oil companies had already restarted purchases of Russian Urals crude in late 2025. This discounted Russian grade can serve as a partial substitute for Venezuelan heavy crude.
However, differences in quality, logistics, and freight costs mean that switching may still result in higher overall expenses compared to the previous Venezuelan flows. **Impact on India-Venezuela Bilateral Trade
In 2025, bilateral trade between India and Venezuela was estimated at around $40 million. India's imports (mainly crude oil) exceeded $20 million, while exports stood at $15 million.
India supplies Venezuela with pharmaceuticals, generic medicines, machinery, Surat textiles, chemicals, and electronics. Indian generic drugs play a critical role in Venezuela's healthcare system, often supplied at very low prices or even on humanitarian/free-of-cost basis.
India's Policy: Neutrality and Caution
India has chosen not to take sides in the U.S.-Venezuela conflict. When the U.S. imposed sanctions in the past, India refrained from open criticism.
Currently, major trade deal negotiations are underway between India and the United States. Any aggressive statement on the Venezuela issue could jeopardize or delay these talks. Hence, New Delhi is adopting a strategy of restraint and quiet diplomacy. Future Concerns
The U.S. intervention is likely to increase volatility in global oil markets in the coming months. For a major importer like India, this represents a serious energy security challenge.
Greater reliance on alternative sources such as Russia, Iraq, and others will be necessary, but in the long run, it may negatively affect oil prices, refining margins, and overall energy costs.
This episode once again highlights how geopolitical tensions can directly disrupt energy security and economic strategies. It is now imperative for India to accelerate diversification of oil import sources and invest more heavily in alternative energy pathways.
Friday World – January 4, 2026
Sajjadali Nayani ✍
