The Aakhya Weekly #179 | Crude Calculations: Energy Choices in a Shifting Geopolitical Order

Jan 16, 2026

In Focus: Barrels, Borders and Balancing Acts

With recent developments in Venezuela, it appears that a gateway long closed to India may be slowly reopening. The removal and transfer of Venezuelan President Nicolás Maduro to the United States marks a dramatic political rupture for Caracas. For many Venezuelans, it represents the removal of an entrenched authoritarian figure; for Washington, it creates an unprecedented opportunity to exert leverage over one of the world’s largest proven oil reserves—estimated at over 303.2 billion barrels, or roughly 17–18 percent of the global total.

For years, Venezuela’s vast hydrocarbon wealth remained severely underutilised. Decaying infrastructure, sweeping U.S. sanctions, institutional collapse, and political turmoil rendered production unreliable and exports diplomatically radioactive. That context has now shifted. A transitional government led by former Vice President Delcy Rodríguez has emerged, operating amid significant U.S. political pressure and influence. There have also been preliminary discussions around a potential new framework for managing Venezuelan oil exports. Under this arrangement, Venezuela could, under certain U.S.-approved conditions, release between 30 and 50 million barrels of stored crude oil, which would be marketed and sold globally through U.S.-approved channels. Any such process would likely be subject to U.S. regulatory oversight through sanctions compliance mechanisms rather than direct operational control. The U.S. would retain significant leverage over exports through sanctions relief, licensing, and financial compliance requirements.

At least on paper, this framework addresses two of Venezuela’s biggest challenges: institutional decay and international legitimacy. While it may take decades for Venezuela to rebuild its economy through oil revenues alone, the outlook is undeniably more optimistic than it has been in years. For India—one of the world’s fastest-growing energy consumers and a country that depends on imports for nearly 88 percent of its crude oil needs—the question naturally arises: does this reopening present a viable alternative to Russian oil?

The answer, as with most matters of energy geopolitics, is nuanced.

A Familiar Partner with Heavy Crude Advantages

India’s engagement with Venezuelan oil is not new. Well before the current political reset, New Delhi had established itself as a meaningful buyer and investor in Venezuelan crude. As recently as 2019, Venezuela supplied approximately 6.7 percent of India’s total crude oil imports. Indian public sector firms and private refiners had long viewed Venezuela as a strategic source of heavy crude. This historical relationship gives India a technical and commercial advantage should Venezuelan exports resume at scale.

Much of Venezuela’s production—especially grades such as Merey-16 and Hamaca—is heavy, high-sulfur crude with elevated asphaltene content. Not all refineries can process such oil efficiently. Indian refiners, however, are unusually well-positioned in this regard. Reliance Industries, Indian Oil Corporation, and Hindustan Petroleum have invested heavily in complex refining infrastructure capable of handling heavy and sour crude blends. These facilities were deliberately designed to maximise margins from discounted, difficult-to-process oil, making Venezuelan grades a natural fit from a refining perspective.

Logistics, too, are not an insurmountable obstacle. While Venezuela is geographically distant, India already imports heavy crude from suppliers such as Iraq’s Basrah Heavy and Canada’s Cold Lake, both of which involve long shipping routes and higher freight costs. In comparison, Venezuelan crude—once supply chains are normalized—could be competitive, particularly if volumes rise and freight economies of scale come into play.

From a purely commercial standpoint, then, Venezuela appears attractive. The crude is compatible with Indian refineries, diversification would strengthen India’s energy security, and a revived Venezuelan supply could reduce overdependence on a narrow set of producers. On the surface, Venezuela looks less like a risky experiment and more like a logical addition to India’s import basket.

But geopolitics rarely allows commercial logic to operate in isolation.

Sanctions, Oversight and the Limits of Strategic Freedom

The central complication lies in the U.S.-led framework governing Venezuelan oil. Any country seeking access to this crude, including India, would need to operate within mechanisms explicitly approved by Washington. As of now, no comprehensive regulatory guidance has been issued by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). This regulatory ambiguity places India in a strategic limbo.

Blind compliance with an evolving and opaque sanctions regime carries risks of its own. India has already faced sustained pressure from the United States over its energy ties with Russia, and the introduction of the proposed Sanctioning Russia Act 2025 has only heightened these concerns. If enacted, the bill could impose tariffs of up to 500 percent on countries purchasing Russian oil—a punitive measure that would significantly impact India’s economy. Although the legislation has been introduced but not yet approved, it reflects the volatility of the American political system and the unpredictability of its sanctions policy.

Against this backdrop, a shift away from Russian oil toward Venezuelan crude appears strategically unsound. Russian supplies have been stable, discounted, and operationally efficient for Indian refiners, with a regulatory framework that—while politically sensitive—is already understood and embedded in India’s trade practices. Venezuelan oil, by contrast, entails extensive U.S. oversight, evolving compliance rules, and the persistent risk of policy reversal tied to Washington’s domestic politics.

For India, which values predictability in energy procurement, such uncertainty is significant. More importantly, arrangements that place production, marketing, or payments under external supervision undermine India’s strategic autonomy—a long-standing pillar of its foreign policy.

Russian Oil, Strategic Balancing and India’s Way Forward

A comparison with Russian oil underscores why Venezuela cannot realistically replace Russia as India’s primary alternative supplier—at least not in the near term. India currently imports between one and two million barrels of oil per day from Russia. In 2025 alone, imports reached approximately 20.4 million barrels, with cumulative trade since 2022 valued at nearly €144 billion.

Russian Urals crude is not only discounted but also logistically efficient. Shipments typically depart from Baltic ports such as Ust-Luga and Primorsk, transit through the Red Sea and the Bab el-Mandeb Strait, and arrive at India’s west coast ports—Jamnagar-Sikka, Kandla, and Mundra—relatively quickly. In contrast, Venezuelan crude shipped from ports like Puerto Cabello or La Guaira would require VLCC routes around Africa, extending transit times to roughly 47–50 days. Speed, cost, and reliability all favour Russian supplies. For India, which must balance energy affordability with macroeconomic stability, these factors matter more than abstract geopolitical signaling.

At the same time, continued reliance on Russian oil exposes India to escalating Western pressure and the risk of future punitive measures. This tension defines India’s current strategic dilemma. On one hand, Russian oil remains indispensable—cheap, processable, and dependable. On the other hand, the cumulative impact of tariffs, sanctions threats, and political friction with the United States cannot be ignored. India cannot afford to abruptly abandon Russian imports, nor can it indefinitely absorb economic shocks imposed by external powers.

The likely path forward lies in calibrated balancing. Indian imports of Russian oil are already showing signs of gradual decline, allowing it to signal reduced dependency without triggering supply disruptions. Simultaneously, India is keeping its options open—maintaining diplomatic and commercial engagement with Venezuela without committing to large-scale purchases under uncertain regulatory conditions.

This approach reflects a broader pattern in India’s foreign policy. Whether in AI chip limitations or emerging frameworks such as Pax Silicon, India has increasingly found itself in a space where it is neither a fully trusted ally nor an expendable outsider. It must navigate great-power competition while preserving its own strategic identity.

In the case of Venezuelan oil, the same logic applies. India will not rush to replace Russian crude with a politically supervised Venezuelan alternative. Instead, it will hedge—reducing exposure where necessary, diversifying cautiously, and engaging all sides without overcommitting to any single power bloc. In an anarchical world order defined by flux and rivalry, this ability to play multiple hands may be India’s greatest strategic asset.

A Few Good Reads

Soumya Bhowmick argues that India is deliberately diversifying its trade strategy, using the EU FTA push to hedge against US policy volatility.
Lloyd Mathias makes the case that India’s gig economy debate needs nuance, not binary judgments, arguing for a balanced approach that protects workers through transparency and portable social security.
Ausaf Sayeed argues that Iran’s unfolding crisis is not just domestic unrest but a regional stress test, warning that India must move beyond passive neutrality and adopt pragmatic engagement.
Pratap Bhanu Mehta argues that India’s real economic threat is not equality but oligarchy, contending that high inequality undermines growth, entrepreneurship, social trust, and democratic integrity.
Shashi Tharoor suggests that Sergio Gor’s arrival as US ambassador creates a rare opening to reset India–US ties, provided Washington moves quickly on tariff relief and strategic signalling.

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