Venezuela’s changes won’t sway crude oil prices
Crisil Ratings on Tuesday stated that recent developments in Venezuela are unlikely to have any significant near-term effect on crude oil prices, given that the Latin American nation holds a relatively small share of global supply. A US military operation in early January led to the capture of President Nicolas Maduro on drug-related charges, creating uncertainty in the nation, which possesses some of the largest proven crude reserves globally.
Crisil Ratings, in a note, stated that even if the situation escalates and disrupts crude oil production in Venezuela, the impact on global oil prices would likely be limited, as the country accounts for only about 1.5 per cent of global crude supply. Brent crude prices have shown a notable consistency in recent days, staying just above USD 60 a barrel. The situation in Venezuela is expected to have minimal effect on India’s global trade or the credit quality of Indian companies. It stated that India’s direct trade exposure to Venezuela is minimal. Imports from the South American nation constitute less than 0.25 percent of India’s overall imports, with crude oil representing over 90 percent of the approximately Rs 14,000 crore imports in fiscal 2025. Venezuela provides approximately 1 percent of India’s crude oil needs.
India imports nearly 85 per cent of its crude oil needs and remains sensitive to global price movements. However, Crisil does not anticipate that the situation in Venezuela will have any near-term impact on oil prices. In the medium to long term, increased investment in Venezuela’s vast untapped oil reserves could enhance global supply and potentially ease crude prices, which would benefit Indian companies. “While we do not anticipate any material near-term impact of the Venezuela situation on crude oil prices, investments for increasing crude oil production in Venezuela, which has vast untapped reserves, could boost oil supply globally and lead to softening of crude oil prices over the medium to long term, which could be a positive for India Inc,” it said.
In fiscal 2025, India’s exports to Venezuela fell short of Rs 2,000 crore, representing less than 0.1 percent of the total exports. These were varied across sectors, including pharmaceuticals, ceramics, textiles, and two-wheelers. Pharmaceutical exports reached approximately Rs 900 crore, accounting for less than 0.5 per cent of India’s overall pharma exports, whereas other sectors reported modest shipments ranging from Rs 80-120 crore each. Crisil Ratings stated that it does not anticipate any significant impact on the credit profiles of Indian companies with ties to Venezuelan customers, considering the limited scale of trade. However, it emphasized that it will keep a close watch on developments.
