Venezuela Oil Crisis Deepens, India Watches Global Crude Market Risks

Venezuela, despite holding the world’s largest proven crude oil reserves, continues to struggle with severely constrained production due to years of under-investment, mismanagement, political interference, corruption and international sanctions, according to a report released on Monday.

A recent political development involving United States action against Venezuelan President Nicolas Maduro has added a fresh layer of uncertainty to global oil markets. The report noted that Maduro, who has been in power since 2013, largely governed through decrees, and the unfolding situation could trigger short-term volatility in crude prices.

Data cited in the report shows Venezuela possesses an estimated 303.8 billion barrels of proven oil reserves as of 2020, marginally ahead of Saudi Arabia’s 297.5 billion barrels. Canada, Iran and Iraq follow at a significant distance, while the United States, despite being the world’s largest consumer, holds comparatively modest reserves of 68.8 billion barrels.

However, Venezuela’s oil production has fallen sharply. Output stood at around 1 million barrels per day in November 2025, far below the United States’ 13.7 million barrels per day and Saudi Arabia’s 9.7 million barrels per day. Analysts pointed out that Venezuela’s current production is barely one-third of what it was a decade ago.

Historically, the country was among the world’s top oil producers. In 1970, Venezuela produced about 3.7 million barrels per day, nearly matching Saudi Arabia’s output at the time and ranking just behind the United States and the former Soviet Union. The steady decline since then has been attributed to structural weaknesses within the oil sector rather than reserve limitations.

The report cautioned against expectations of a rapid recovery. Even if conditions improve, a meaningful increase in Venezuelan oil output would take at least three to six months to materialise, it said, underlining that no immediate solution exists to revive production.

In the near term, global oil markets are expected to factor in a higher risk premium amid geopolitical uncertainty. Any price movement, however, is likely to depend on responses from major global players such as Russia and China.

From an Indian perspective, the developments carry market relevance. With Brent crude trading around $60 per barrel, the report identified Indian upstream companies Oil and Natural Gas Corporation (ONGC) and Oil India as potential beneficiaries of stable price conditions. It added that India’s oil marketing companies are likely to maintain profitability as long as crude prices remain subdued.

At the same time, caution was advised due to domestic policy signals. The recent hike in excise duty on cigarettes has raised expectations of a possible increase in fuel excise duties as well. Such a move could once again require oil marketing companies to absorb part of the burden, similar to April 2025, making valuations a concern.

For India, which remains heavily dependent on crude imports, prolonged instability in oil-producing regions like Venezuela reinforces the importance of diversified sourcing, strategic reserves and steady domestic exploration to cushion against external shocks.