The global oil market is on alert following military strikes by the United States on Venezuela this past Saturday. However, initial assessments suggest the disruption to worldwide crude supplies will be minimal, with a similarly negligible impact expected for India.
Oil Markets Show Resilience Despite Tensions
Venezuela, home to the planet's largest proven oil reserves, naturally triggered concerns that conflict could roil international prices. Yet, the market reaction has been muted. This calm stems largely from the fact that US sanctions had already severely constrained Venezuelan oil exports, long before the recent military action, limiting the nation's role in global supply chains.
Confirming the stability, Venezuela's state-owned energy giant, PDVSA, stated that its oil production and refining activities are continuing normally. The company reported that its most critical installations escaped damage from the US attacks. This was corroborated by two sources with knowledge of PDVSA's operations, who told Reuters that key oil infrastructure remains unharmed.
While the port of La Guaira, close to the capital Caracas, sustained significant damage, it is not a facility used for exporting crude oil.
India's Exposure Deemed Insignificant
For India, the developments are unlikely to cause any major economic ripples. Former Indian Ambassador to Venezuela, R Viswanathan, explained to ANI that India does not rely on Venezuelan oil and bilateral trade between the two nations is limited.
"We are not dependent on Venezuela for oil. Our trade is very little and we have some investment by ONGC in their oil fields... So, this is not going to affect India in any big way," Viswanathan said. He noted that the US action was not unexpected, recalling past threats during Donald Trump's first presidential term.
US Aims for Deeper Involvement in Venezuelan Oil
The strikes followed months of US pressure on Venezuelan President Nicolás Maduro over allegations of drug trafficking and illegitimacy. In the aftermath, US President Donald Trump announced an intention for American companies to play a central role in Venezuela's oil sector.
"We have the greatest oil companies in the world... and we're going to be very much involved in it," Trump declared in an interview with Fox News. This move builds upon earlier actions, including a US blockade on oil tankers heading to or from Venezuela announced in December.
These measures have already crippled Venezuela's export capacity. Reuters reported that the seizure of two Venezuelan oil cargoes and the tanker blockade slashed the country's exports last month to roughly half of the 950,000 barrels per day shipped in November. The situation has forced PDVSA to store crude on idle tankers and slow port operations.
Analytics firm Kpler estimates Venezuela's current crude and condensate production at about 900,000 barrels per day, representing just 1% of global supply. Of its exports, approximately 76% is shipped to China, primarily to independent refiners, as state-owned entities steer clear of sanctioned cargoes. The overall well-supplied market has so far cushioned the price impact of these disruptions.
