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Venezuela crisis and India’s energy security

05 Jan 2026 GS 3 Economy
Venezuela crisis and India’s energy security Click to view full image

Context

The recent U.S. military action in Venezuela and statements regarding control over Venezuelan oil have raised concerns globally. However, India’s energy security remains largely insulated from these developments.

Key facts

  • India’s crude oil import from Venezuela (FY 2025–26 till Nov):
    $255.3 million, about 0.3% of total oil imports

  • Peak import (2013): ~$13 billion

  • Trend since 2019: Sharp decline due to U.S. sanctions and threat of secondary sanctions

  • Venezuela’s share:

    • ~3.5% of OPEC exports

    • ~1% of global oil supply

Why India’s energy security is not significantly affected

1. Marginal trade exposure

India’s dependence on Venezuelan crude is negligible, making supply disruptions economically insignificant.

2. Sanctions already factored in

  • India has gradually disengaged since 2019

  • Trade disruption is not a new shock, but an already-adjusted reality

3. Nature of Venezuelan crude

  • Venezuelan oil is heavy and extra-heavy crude

  • Requires specialized refineries

  • Most Indian refineries are optimized for Middle Eastern crude blends

4. Diversified import basket

India sources crude from:

  • West Asia (Saudi Arabia, Iraq, UAE)

  • Russia

  • Africa

  • Latin America (limited)

This diversification cushions geopolitical shocks.

OPEC angle

  • Organization of the Petroleum Exporting Countries (OPEC) influences prices and supply

  • Despite being an OPEC member, Venezuela’s actual production is low

  • Hence, instability in Venezuela does not materially affect OPEC’s overall output strategy

What is OPEC

  • Organization of the Petroleum Exporting Countries is an intergovernmental organization

  • Objective:

    • Enable cooperation among major oil-producing and oil-dependent countries

    • Collectively influence global oil markets

    • Maximize returns from petroleum resources

  • Operates through coordinated production policies.

   

Foundation and origin

  • Founded: 14 September 1960

  • Place: Baghdad (Iraq)

  • Founding members (5):

    • Iran

    • Iraq

    • Kuwait

    • Saudi Arabia

    • Venezuela

Membership

  • Current members: 12 countries

  • Membership is dominated by:

    • Middle Eastern

    • African

    • Latin American oil producers

  • Members pay equal membership fees irrespective of production size.

OPEC membership (as of January 2026)

  • Total members: 12

  • Current member countries

  • Africa (6):

    • Algeria

    • Republic of the Congo

    • Equatorial Guinea

    • Gabon

    • Libya

    • Nigeria

  • Middle East (5):

    • Iran

    • Iraq

    • Kuwait

    • Saudi Arabia

    • United Arab Emirates

  • South America (1):

    • Venezuela

Africa has more OPEC members than the Middle East

Countries no longer in OPEC

  • Angola – Withdrew effective 1 January 2024

  • Qatar – Left in January 2019

  • Ecuador – Not a current member

  • Indonesia – Not a current member

Membership in OPEC is not permanent

Share in global oil economy

  • Global oil production share (2022): ~38%

  • Global proven oil reserves: ~79.5% located in OPEC countries

  • Middle East share:

    • ~67.2% of OPEC’s total proven oil reserves

  • Key inference:

    • OPEC’s power lies more in reserves and spare capacity than current production alone

Organisational structure

OPEC Conference (Supreme authority)

  • Highest decision-making body

  • Composed of:

    • Delegations headed by oil ministers of member countries

  • Functions:

    • Sets overall policy

    • Decides production targets

  • Meetings:

    • At least twice a year

    • Extraordinary sessions when required

Secretariat

  • Headed by OPEC Secretary General

  • Executes decisions of the Conference

  • Provides research, data, and coordination support

Headquarters

  • Vienna, Austria

  • All ordinary Conference meetings are held here

Decision-making principles

  • Unanimity

  • One member, one vote

  • Equal budget contribution despite unequal production capacities
    (voting power is not proportional to output)

Saudi Arabia’s special position

  • Saudi Arabia is:

    • Largest oil exporter within OPEC

    • Possesses substantial spare production capacity

  • Acts as:

    • Swing producer — increases or cuts output to stabilize global prices

  • Hence regarded as:

    • OPEC’s de facto leader (informal, not institutional)

Prelims Practice MCQs

Q. The original founding members of OPEC include:

  1. Iran

  2. Iraq

  3. Kuwait

  4. Saudi Arabia

  5. Qatar

  6. Venezuela

Select the correct answer using the code below:

(a) 1, 2, 3, 4 and 6 only
(b) 1, 2, 3, 4 and 5 only
(c) 2, 3, 4, 5 and 6 only
(d) 1, 3, 4, 5 and 6 only

Answer: (a)

Explanation:
Qatar was not a founding member.

Q. According to recent estimates, OPEC countries account for approximately:

(a) 25% of global oil production and 40% of proven reserves
(b) 38% of global oil production and about 80% of proven reserves
(c) 50% of global oil production and 50% of proven reserves
(d) 60% of global oil production and 90% of proven reserves

Answer: (b)

Explanation:
OPEC controls a much higher share of reserves than production.



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