India Should Stay Out of the Venezuela Debate: U.S. Moves to Challenge Russia and China, Here’s How India Could Benefit

New Delhi: The United States has shown significant force in Venezuela with its move towards regime change, marking a new chapter in what can be seen as a modern “Cold War.” This development could be a boon for India. Should the U.S. gain control over Venezuela and lift sanctions on its oil, India stands to benefit in several ways.

Venezuela’s Oil and India’s Strategic Gains

If the sanctions on Venezuela’s oil are lifted, India could diversify its oil imports and secure payments for dues owed by ONGC Videsh Ltd., the foreign arm of India’s state-owned oil giant. The company holds stakes in Venezuelan oil fields like San Cristobal and Carabobo-1, amounting to nearly $1 billion in outstanding payments. With these sanctions removed, India could once again access oil from Venezuela, reducing its reliance on a few countries for crude oil imports.

Heavy Crude and Refining Expertise

Venezuela holds over 300 billion barrels of oil, making up about 17% of the world’s total supply, although much of this is heavy crude. India is among the few countries equipped to refine this type of oil. Before the imposition of U.S. sanctions, India was a significant buyer of Venezuelan oil, importing up to 3-4 lakh barrels per day. However, these imports have ceased due to the U.S. embargo.

Once sanctions are lifted, Indian refineries could rapidly ramp up oil purchases from Venezuela, similar to how India increased imports from Iran after the easing of sanctions under the Joint Comprehensive Plan of Action (JCPOA) deal in 2015.

Smart Oil Purchase Strategy

India has shown significant prudence in sourcing crude oil globally. When Venezuelan oil supplies are restored, Indian companies could seize the opportunity to increase their oil purchases. This could have a long-term impact, especially on oil prices, as increased supply could help keep prices low. The oil market has shown resilience despite geopolitical events in regions like Ukraine, Gaza, Libya, and Iran.

Impact on Global Oil Prices and Strategic Leverage

As Venezuela’s oil infrastructure restarts, global oil supply will increase, which could lead to lower oil prices. For India, this is good news. Oil prices have remained relatively low for the past 12-18 months due to a combination of reduced demand and high supply. With Venezuela back in the game, oil prices are expected to stay suppressed, benefiting oil-importing nations like India.

Historically, the long-term low oil prices during the Cold War were a major factor in the collapse of the Soviet Union. Today, Russia remains heavily dependent on oil exports. Lower crude oil prices could hurt Russia’s revenues, increasing pressure on Moscow to reach agreements with the West. This shift could benefit India by strengthening ties with Russia, while also reducing Moscow’s dependency on China.

China’s Role and Opportunities for India

China has previously secured Venezuelan crude oil in exchange for loans. However, with U.S. influence growing, Venezuela’s new government may reconsider these old agreements, possibly opening the door for India to negotiate new supply contracts. This could offer India a unique opportunity to secure a more stable oil supply from Venezuela.

Three Direct Benefits for India:

• Increased global oil supply will likely drive prices down.
• More options for oil imports will reduce dependency on a few countries.
• China’s influence on Venezuela may diminish, offering India a strategic edge.

India’s Position: Stay Out of the Debate

In the coming days, there will likely be intense debates on the ethical aspects of the U.S. campaign in Venezuela. However, India’s best interest lies in staying out of this debate. Fortunately, India does not have deep strategic interests in Venezuela, unlike in its relations with the U.S. As the situation unfolds, India’s focus should be on securing its energy interests and strengthening its global position.