Venezuela Oil Reserves: US Control and Global Markets

Venezuela Oil Reserves Latest News

• Oil has emerged as the central driver behind the US action against Nicolás Maduro. 
• After Maduro’s capture recently, US President Donald Trump announced that Washington would take control of Venezuela’s oil sector, with American oil majors investing to revive the country’s dilapidated infrastructure.
• However, experts caution that reviving Venezuela’s oil industry will take years, given prolonged damage from sanctions and economic collapse.
• Despite holding the world’s largest proven oil reserves, Venezuela contributes less than 1% of global oil production. 
• With global markets currently well supplied and demand subdued, analysts do not expect immediate price shocks. Past US actions, including tanker seizures, had little effect on global oil prices.
• If the US eventually succeeds in restoring and controlling Venezuelan oil output, increased supply could exert downward pressure on prices, but only over the long term.

Venezuela’s Oil Wealth: Huge Reserves, Limited Output

• Venezuela holds the world’s largest proven oil reserves, estimated at over 300 billion barrels, roughly one-fifth of global reserves. 
  • Saudi Arabia, the world’s largest oil exporter, ranks second in reserves. 
• Yet Venezuela produces only around 1 million barrels per day (bpd), compared to over 100 million bpd globally.
• Venezuela is a member of Organization of the Petroleum Exporting Countries (OPEC) but currently contributes only about 3.5% of OPEC’s exports and around 1% of global oil supplies.

Why Production Lags Despite Massive Potential

• Venezuela’s low output stems from:
  • US sanctions constraining oil and gas exports
  • A prolonged economic crisis
  • Severe underinvestment and deteriorated oil infrastructure
• Together, these factors have sharply limited realisation of its resource potential.

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US Intervention and Trump’s Plan

• US President Donald Trump has said Washington aims to bring American oil majors into Venezuela to invest billions of dollars to repair broken infrastructure and ramp up production—benefiting both Venezuela and US companies, and supplying oil to global markets, including the US.
• If implemented, the plan could:
  • Make Venezuela a significantly larger oil supplier
  • Reopen the sector to foreign investment beyond US firms
  • Add supply to global markets, creating downward pressure on oil prices over the long term
• However, experts caution that tangible effects would take several years, given the scale of investment required to revive ageing infrastructure.

India Watches Venezuela Closely Amid Shifting US Policy

• How US–Venezuela relations evolve in the coming months is critical for India. 
• Any easing or suspension of US sanctions could allow Venezuelan oil to re-enter global markets—including India—and reopen stalled investment and dividend flows.

Potential Gains for India’s Oil Companies

• A sanctions thaw could enable ONGC Videsh, the overseas arm of Oil and Natural Gas Corporation, to recover over $500 million in pending dividends from two Venezuelan projects:
  • San Cristobal (40% stake)
  • Carabobo 1 (11% stake)
• ONGC Videsh has sought US approvals since 2024, but permissions are still pending.

India’s Crude Import History with Venezuela

• An analysis of recent trade data indicates that the US attack on Venezuela is unlikely to directly affect India’s energy security. 
• India imported $255.3 million worth of oil from Venezuela up to November 2025, accounting for just 0.3% of total oil imports in the current financial year.
• Before US sanctions in 2019, Reliance Industries Ltd (RIL) was a regular buyer of Venezuelan crude.
  • 2019: Venezuela was India’s 5th-largest oil supplier, exporting ~16 million tonnes to Indian refiners.
  • Post-2019 sanctions: Imports stopped within months.
• In October 2023, the US briefly eased sanctions, allowing exports for six months—prompting RIL and others to restart imports. 
• These stopped again when the waiver lapsed amid disputes over Venezuela’s elections. 
• RIL later resumed imports under a specific US waiver, but halted them again in summer 2025 after the Trump administration threatened higher tariffs on buyers of Venezuelan crude.

The ‘Chevron Model’ and US Licensing

• ONGC Videsh aims to operate under the “Chevron model”, which allows sanctioned-country operations via specific US licenses.
• Such licenses are issued by the Office of Foreign Assets Control under the US Department of the Treasury and typically:
  • Permit use of US banking channels and the US dollar;
  • Grant foreign companies significant control over finances, operations, production, and marketing, even when the host country’s NOC is the majority shareholder
• In Venezuela’s case, that NOC is Petróleos de Venezuela, SA (PDVSA).

Source: IE | TH