From $7.2 billion peak to near zero: How US sanctions transformed Venezuela from key oil partner to marginal supplier to India

Venezuela has gone from being a major supplier of crude oil to India to a marginal and unreliable source, largely due to geopolitical and regulatory constraints. Between fiscal years 2018 and 2020, the Latin American nation consistently ranked among the top six sources of imported oil from India, at one point accounting for nearly 7% of the country’s crude basket. However, the imposition of US sanctions starting in FY2021 has significantly disrupted this trade, increasing compliance risks and transaction costs and forcing Indian refiners to reduce purchases.

According to the latest report from Rubix Data Science, Venezuela’s Role in India’s Crude Oil Imports: Trend AnalysisIn terms of value, imports peaked at $7.2 billion in fiscal 2019, cementing Venezuela’s place in India’s energy supply strategy. Today, that relationship has largely faded, with imports falling to marginal levels – a reminder of how geopolitics can trump commercial logic in the global energy trade.

From a technical perspective, Venezuela’s heavy, high-sulfur crude has long been suitable for India’s complex refineries. Public sector giants like Indian Oil Corporation (CIO) and Hindustan Petroleum, as well as private players like Dependence Industries have the capacity to address these qualities effectively. Yet despite this compatibility, imports fell to zero in fiscal years 2022 and 2023.

The report emphasizes that the reason is not economic, but rather increased compliance and payment risks following strict US sanctions against Venezuela’s oil sector.

The episode marked a turning point in India’s crude supply strategy, highlighting that in an era of financial constraints, refinery adjustment alone no longer determines supply 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. This window allowed some Indian refiners to resume spot purchases, bringing imports to $802 million in fiscal 2024 and $1.41 billion in fiscal 2025. Venezuela’s share of India’s oil imports has returned to about 1 percent, although far from its previous importance.

The rebound, however, proved fragile. By fiscal year 2026 (April-October 2025), imports had again fallen sharply to just $255 million, with Venezuela’s supplier ranking falling to 18th. Since then, shipments have become sporadic and opportunistic rather than part of a stable flow of trade, reinforcing the extent to which sanctions continue to shape bilateral energy relations.

Where it still matters

Even though direct trade has weakened, Indian companies retain significant exposure to Venezuela, particularly in the oil and gas sector. ONGC Videsh (OVL) has stakes in two Venezuelan oil projects, making it one of the largest Indian investors in the country’s hydrocarbon sector. IOC and Oil India also hold minority interests in the Carabobo heavy oil project and associated joint ventures alongside OVL.

Even though production and cash flow remain limited, these investments remain present on corporate balance sheets and remain sensitive to changes 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, thus maintaining residual commercial links.

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 notes that Venezuela is now proposing a broader resource partnership with India. In late 2025, Caracas has expressed interest in attracting Indian investment in nickel, bauxite, coal and gold, while also highlighting opportunities in lithium and rare earth elements that are essential for batteries, electric vehicles and clean energy technologies.

What the analysts say

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

Analysts say a return of U.S. oil companies could quickly boost production by restoring deteriorated infrastructure. Kpler’s Nikhil Dubey notes that if sanctions ease, as seen during past geopolitical shifts, trade flows could resume quickly, allowing Venezuelan barrels to return to Indian refineries.

Large refiners such as Reliance Industries and Nayara Energy already have the capacity to process Venezuelan grades. For ONGC Videsh, which is owed more than a billion dollars in unpaid contributions, the restructuring of the sector could finally allow recovery. Dubey adds that renewed access to Venezuelan crude would also support India’s broader efforts to diversify away from Russian oil and reduce the risks of supply concentration.