NEW DELHI, India — Ongoing geopolitical tensions between the United States and Venezuela are unlikely to pose any immediate risk to India or lead to a rise in the country’s oil import bill under current market conditions, according to a report released on Tuesday.
The report by Bank of Baroda said India’s import bill is expected to remain stable as global crude oil supplies are currently in surplus, while Venezuela accounts for only about 1 percent of global oil production.
Despite Venezuela holding one of the world’s largest proven oil reserves—estimated at about 19.4 percent of the global total—the bank said speculation that the United States could tap these reserves to boost supply has already helped soften crude prices in recent trading sessions.
Given the prevailing global supply surplus, the report said it does not foresee any upside risk to India’s oil import bill in the near term.
Bilateral trade between India and Venezuela stands at about $1.9 billion, comprising exports worth $217 million and imports of $1.6 billion. Petroleum, oil and lubricants make up the bulk of India’s imports from Venezuela.
For imports, petroleum, oil and lubricants—particularly crude petroleum—account for the largest share. The unit value of India’s oil imports from Venezuela is also lower compared with several other major supplier countries, helping to contain overall costs, said Dipanwita Mazumdar, economist at Bank of Baroda.
India’s exports to Venezuela have declined at a five-year compound annual growth rate of 8.8 percent, compared with growth of 6.9 percent in India’s total global exports, indicating weakening trade momentum between the two countries.
The United States remains the largest destination for Venezuela’s crude exports, followed by China and India, underscoring the role of oil diplomacy in ongoing geopolitical negotiations.
Analysts said in a separate recent report that any increase in Venezuelan oil production by U.S. companies could put further downward pressure on global crude prices, benefiting oil-importing nations including India. However, they cautioned that continued geopolitical uncertainty could discourage large-scale investment in the Latin American country. (Source: IANS)
