From $7.2 bn peak to near zero: How US sanctions turned Venezuela from key oil partner to marginal supplier for India

Venezuela has moved from being a major crude oil supplier to India to a marginal and unreliable source, largely due to geopolitical and regulatory constraints. Between FY2018 and FY2020, the Latin American nation consistently ranked among India’s top six sources of imported oil, at one point accounting for nearly 7% of the country’s crude basket. However, the imposition of US sanctions from FY2021 sharply disrupted this trade, raising compliance risks and transaction costs and forcing Indian refiners to scale back purchases.

According to  Rubix Data Science’s latest report, Venezuela’s Role in India’s Crude Oil Imports: Trend Analysis, in value terms, imports peaked at $7.2 billion in FY2019, cementing Venezuela’s place in India’s energy sourcing strategy. Today, that relationship has largely faded, with imports shrinking to marginal levels — a reminder of how geopolitics can override commercial logic in global energy trade.

From a technical standpoint, Venezuela’s heavy, high-sulphur crude has long suited India’s complex refineries. Public sector giants such as Indian Oil Corporation (IOC) and Hindustan Petroleum, along with private players like Reliance Industries, have the capability to process these grades efficiently. Yet despite this compatibility, imports fell to zero in FY2022 and FY2023.

The report noted that the reason was not economics but escalating compliance and payment risks following stringent US sanctions on Venezuela’s oil sector.

The episode marked a turning point in India’s crude procurement strategy, underlining that in an era of financial restrictions, refinery fit alone no longer determines sourcing decisions. Regulatory exposure and settlement risks now play an equally decisive role.

A brief revival

There was a short-lived recovery after Washington partially eased sanctions in late 2023. That window allowed some Indian refiners to resume spot purchases, lifting imports to $802 million in FY2024 and further to $1.41 billion in FY2025. Venezuela’s share of India’s oil imports edged back to about 1%, though far from its earlier prominence.

The rebound, however, proved fragile. By FY2026 (April–October 2025), imports had again slipped sharply to just $255 million, with Venezuela’s supplier ranking falling to 18th. Shipments have since become sporadic and opportunistic rather than part of any stable trade flow, reinforcing how deeply sanctions continue to shape the bilateral energy relationship.

Where it still matters

Although direct trade has weakened, Indian companies retain meaningful legacy exposure in Venezuela, led by the oil and gas sector. ONGC Videsh (OVL) holds equity stakes in two Venezuelan oil projects, making it one of India’s largest investors in the country’s hydrocarbons sector. IOC and Oil India also have minority interests in the Carabobo heavy-oil project and related joint ventures alongside OVL.

While production and cash flows have remained constrained, these investments continue to sit on corporate balance sheets and remain sensitive to shifts in the political environment and sanctions regime. Among private players, Reliance Industries, Nayara Energy and Mangalore Refinery and Petrochemicals (MRPL) have historically sourced Venezuelan heavy crude, maintaining residual commercial linkages.

Beyond energy, Engineers India operates an overseas office in Caracas, while pharmaceutical companies such as Sun Pharma, Glenmark and Cipla maintain a limited but persistent non-oil presence through local subsidiaries and exports of essential medicines.

Minerals after oil

With crude flows dwindling, the report noted that Venezuela is now pitching a broader resource partnership to India. In late 2025, Caracas signalled interest in attracting Indian investment into nickel, bauxite, coal and gold, while also highlighting opportunities in lithium and rare earth elements that are critical for batteries, electric vehicles and clean-energy technologies.

What analysts say

According to a PTI report, the prospect of US oversight of Venezuela’s oil sector is raising hopes that India could unlock nearly $1 billion in long-pending dues while regaining access to Venezuelan crude. A possible easing of sanctions and a revival in production could help Indian refiners diversify supplies and reduce geopolitical risk.

Analysts say a return of American oil companies could quickly lift output by restoring deteriorated infrastructure. Nikhil Dubey of Kpler notes that if sanctions ease, as seen in past geopolitical shifts, trade flows could resume rapidly, allowing Venezuelan barrels to return to Indian refineries.

Major refiners such as Reliance Industries and Nayara Energy already have the capability to process Venezuelan grades. For ONGC Videsh, which is owed over $1 billion in unpaid dues, sector restructuring could finally enable recovery. Dubey adds that renewed access to Venezuelan crude would also support India’s broader effort to diversify away from Russian oil and reduce supply concentration risks.