Venezuela has emerged as India’s third-largest crude oil supplier this month, as the war on Iran and the closure of the Strait of Hormuz force countries to scramble for alternative energy sources.
Shipments from Venezuela to India are nearly 50 percent higher than they were in April, according to energy tracking data.
Recommended Stories
list of 4 itemsend of list
Venezuelan Acting President Delcy Rodriguez is expected to travel to India next week to discuss oil sales, United States Secretary of State Marco Rubio said.
At an estimated 303 billion barrels of oil – about 17 percent of known global oil resources – the South American nation holds the world’s largest reserves, larger even than those held by Saudi Arabia and the US, though years of US sanctions and government mismanagement had crippled production in Venezuela.
As conflict engulfs the Middle East and oil markets tighten, Washington, which took control of Venezuela’s oil industry following the abduction of former President Nicolas Maduro from Caracas by US forces in January, now appears eager to push Venezuelan crude back onto the global market.
India has been buying more Russian oil amid the global energy crisis triggered by the US-Israel war on Iran, much to the irritation of the US, which argues that revenues are supporting Russia’s war on Ukraine. Before the Iran war began, Indian Prime Minister Narendra Modi had promised to stop buying Russian oil and instead buy crude from the US and Venezuela in February.
Now, Rubio, who will travel to India from May 23 to 26 for talks on trade, defence cooperation and energy security, says Washington wants to make sure India does this.
“We want to sell them as much energy as they’ll buy,” Rubio said.
“We also think there’s opportunities with Venezuelan oil. In fact, it’s my understanding that the interim president of Venezuela will be travelling to India next week as well.”
Analysts say Washington is attempting to reshape global energy supply chains – reducing Iran’s leverage in any peace talks – while simultaneously tightening its grip over Venezuela’s oil sector.
How has India been affected by the Strait of Hormuz crisis?
Nearly half of India’s crude oil imports are normally shipped from Gulf producers through the Strait of Hormuz, along with large volumes of liquefied natural gas and petroleum gas.
But the narrow Gulf shipping route has become inaccessible as the conflict around Iran intensifies.
India had recently resumed importing Iranian crude in April after a seven-year gap, following a limited easing of US sanctions. Those shipments have now stopped again, with no Iranian cargoes arriving this month because of the ongoing US naval blockade of Iranian ports.
At the same time, supplies from Saudi Arabia – previously India’s third-largest supplier – have nearly halved, falling from 670,000 barrels per day (bpd) in April to about 340,000bpd this month.
Indian officials have also expressed concern over maritime security in the Gulf, with 13 Indian ships stranded in the region and officials saying New Delhi wants to secure their return before sending more vessels to load fuel cargoes.
Several India-linked ships have recently been seized or attacked near the Strait of Hormuz and the coast of Oman. An Indian-flagged cargo vessel sank in Omani waters after a fire caused by what was suspected to be a drone or missile attack.
Why pivot to Venezuela?
Venezuela holds an estimated 303 billion barrels of proven crude reserves, according to the US Energy Information Administration. Despite this, it produces less than 1 percent of global crude supply after years of US sanctions.
In 2007, former President Hugo Chavez nationalised large parts of Venezuela’s oil industry, redirecting profits away from foreign corporations and towards social spending programmes. Washington responded over time with sweeping sanctions that severely restricted Venezuela’s ability to export oil and access international finance.
Chevron remains the only major US oil company with substantial operations in Venezuela, producing about 250,000bpd through joint ventures with the state oil company PDVSA.
ExxonMobil is now reportedly nearing a deal to re-enter Venezuela for the first time in almost two decades, according to The New York Times.
Critics say Washington’s campaign against Maduro was never simply about democracy or human rights, but about restoring US influence over one of the world’s largest oil reserves and replacing Iranian crude with Venezuelan supplies – opening the door to a conflict with Tehran.
The strategy of selling Venezuelan oil into the international energy market serves multiple purposes for Washington: Reducing Iran’s leverage over global oil markets as the US negotiates a peace deal, while simultaneously drawing Venezuela’s oil sector back into the orbit of US capital.
Rodriguez, despite publicly criticising the US-backed operation that removed Maduro, has won praise from President Donald Trump for cooperating with Washington and helping facilitate new oil agreements.
Oil revenues from new export deals remain tightly controlled through mechanisms overseen by the US Department of the Treasury, while companies involved in the trade must operate within conditions set by Washington under US licensing arrangements.
Experts say the parallel visits by Rubio and Rodriguez to India demonstrate how energy diplomacy is increasingly being shaped by the geopolitical fallout from the wars involving Iran and Venezuela.
What is India’s relationship with Venezuelan oil?
India has longstanding ties with Venezuela’s oil sector. Indian state-owned firms, led by ONGC Videsh, entered Venezuela in 2008, seeking access to heavy crude reserves. By 2010, Indian consortia had secured stakes in major projects, including Carabobo-1 in the Orinoco Oil Belt, while in 2012, India overtook China as the largest Asian importer of Venezuelan crude.
Before US sanctions intensified in 2019, Venezuela was among India’s biggest oil suppliers.
But sanctions imposed by Washington on PDVSA forced Indian refiners and traders to sharply reduce purchases to avoid secondary sanctions from the US.
That changed after Washington-backed authorities in Caracas signed a new oil supply agreement with the US following Maduro’s removal in January, when a limited number of companies were authorised to buy Venezuelan crude directly from PDVSA.
Venezuelan oil is particularly well-suited to Reliance Industries’ giant refinery complex in Jamnagar, Gujarat, one of the few facilities in the world capable of processing ultra-heavy crude efficiently.
But only a small number of other Indian refineries are equipped to process the heavy, sulphur-rich oil that is extracted in Venezuela.
Despite this, Venezuela has supplied India with about 417,000bpd so far this month, up from 283,000bpd in April, according to Kpler data. There had been no Venezuelan shipments to India during the previous nine months.
As India’s total crude imports have risen this month to about 4.9 million bpd amid the global oil supply crisis, Rodriguez and Rubio will now be hoping to secure a deal that could pave the way for this surge in oil exports to continue.