Sankhanath Bandyopadhyay, Senior Economist, Infomerics Analytics & Ratings
On 3 January 2026, the United States (US) launched a military operation to arrest President Nicolás Maduro with his wife and remove him from Venezuela. The issue is in a transition phase, as though US removed Maduro from power, but the outlook is still evolving. US President Donald Trump reiterated the underlying intent of this operation is to remove countering narcotics trafficking carried out in Venezuela, alleging Maduro. The Vice President Delcy Rodriguez is now working with Secretary of State Marco Rubio in this regard.
US Sanctions on Venezuela
During Feb’25 the Venezuela’s oil production experienced a moderate decline due to coercive measures by US against the industry including financial and secondary sanctions, which subsequently led production to plummet to historic lows around 350,000 bpd in mid-2020. Such sanctions led substantial hindrances for the Petróleos de Venezuela, S.A.(PDVSA) which is the state-owned oil and gas company of Venezuela.
Though later, (GL44), issued by the Biden administration in October 2023, allowed Venezuela to sell crude oil without restrictions. However, Washington did not renew GL44, reimposing wide reaching restrictions in April 2024 over allegations that the Nicolás Maduro government failed short regarding an agreement with the US-backed opposition. Thereafter, Donald Trump’s return to the White House has made the matter worse, as he directed US could stop “buying oil” from Venezuela.
The Centre for Global Energy Policy based in Columbia has noted that Oil represents more than 90 percent of Venezuelan exports and a major source of the country’s fiscal revenues. However, during the tenure of the Maduro administration, oil production softened by more than 1.5 million barrels per day (b/d) due to a variety of internal factors like- expropriation of oil assets, default of the country’s external debt, and severe deterioration in the industry’s governance and operational standards, in addition to oil sanctions.
Implications for India
India is much less dependent on oil imports from Venezuela compared to other countries, for instance India’s import in the category of “PETROLEUM OILS AND OILS OBTAINED FROM BITUMINOUS MINERALS, CRUDE” from Venezuela has declined by -81.85% during 2024-25 to 2025-26 (during FY26 so far, only $255.27 million crude is imported from Venezuela).
Whereas India has diversified its oil imports from a variety of suppliers, including the Middle East, Russia, and the US. For instance, Russia remains India’s largest supplier (33.7% in FY25 vs. 37.9% in FY24), though its share somewhat reduced amidst new US sanctions on Russian oil majors.
On the other hand, US have experienced substantial growth of its oil imports towards India, increasing its share from 4.3% (FY24) to 7.6% (FY25), with imports jumping 92% in the first eight months of the current fiscal year. India imports oil from other countries including Iraq, Saudi Arabia, UAE, Nigeria, and Kuwait. Interestingly, global crude oil prices have maintained their softening stance and dropped at their lowest at as Brent crude trading around $60.85.
Concluding Remarks:
The incident of capturing the Venezuela President by US is still evolving and there was no immediate adverse market reaction to this, believing that normalisation will uphold. The global brent crude oil prices are at their lowest and does not pose any immediate challenges. Nonetheless, the incident pose uncertainty towards the market, and such events could enhance volatility in the global crude oil prices in future. For instance, as highlighted by the IEA, sanctions in 1Q26 will provide fresh challenges. The stark contrast between surging crude supplies and unexpectedly tight product markets has pushed refinery margins back to levels last seen in the aftermath of Russia’s invasion of Ukraine. The IEA further noted that output from sanctions-hit Russia and Venezuela contracted sharply. The latest incident, however, does not pose any threat to India, as the import sources for India is quite diversified.
