Venezuela oil may not lift global supply any time soon

Venezuela's share is just about 0.8% of global oil output, even as it has around 18% of reserves

- Dhirendra Kumar & Rituraj Baruah

The US intervention in Venezuela is unlikely to immediately increase crude oil supplies for global and Indian refiners, given the prolonged output decline in the sanctions-hit Latin American country, industry experts said.

"Venezuela is currently producing only about 0.8% of global oil output, even as it holds around 18% of global oil reserves," said Prashant Vasisht, senior vice-president and co-group head, corporate ratings, Icra Ltd. "Investment in the oil industry and ramping up production could take years but may eventually lead to significantly higher supplies, easing global oil markets."

India, which imported around 400,000 barrels per day of Venezuelan crude before sanctions were imposed in 2020, currently procures a negligible quantity from the country.

While Venezuela's viscous and heavy crude is expected to reenter global markets at a discount to benchmark Brent and WTI, there is limited refining capability for such grades in India.