Venezuela, home to the world’s largest proven oil reserves, has once again come into global focus following military action by the United States, a development whose consequences are expected to ripple well beyond Washington. While the immediate economic impact on India is likely to be limited, the evolving situation could still open up selective opportunities for Indian oil companies over time.
For India as a whole, there may be no direct or immediate gains from the developments in Venezuela. However, market participants believe that Indian oil refiners and upstream producers could benefit in the medium term if Venezuelan crude gradually re-enters global markets and long-standing investment and payment bottlenecks are resolved.
This possibility appeared to be reflected in stock market movements on Monday. Shares of Oil & Natural Gas Corporation rose about 2 per cent in early trade to Rs 246.80, making it the top gainer on the Nifty 50 index. At the same time, Reliance Industries saw its shares climb more than 1 per cent, touching a fresh 52-week high of Rs 1,611.8.
The rally in Reliance Industries has pushed the market capitalisation of India’s most valuable listed company closer to the Rs 22 lakh crore mark. Investors appear to be factoring in the potential impact that changes in global oil supply dynamics, including the possible return of Venezuelan crude, could have on refining margins and long-term cash flows.
According to a report by Jefferies, Reliance Industries and ONGC are viewed as key Indian beneficiaries if the United States moves toward a restructuring or effective takeover of Venezuela’s oil sector and permits crude exports to resume. Venezuela holds roughly 18 per cent of global proven oil reserves, yet its contribution to current global supply is less than 1 per cent, with production languishing below 1 million barrels per day.
Because output remains so depressed, Jefferies believes the latest geopolitical developments are unlikely to have a meaningful impact on crude prices in the near term, even if trade routes are reshuffled. The brokerage argues that any significant effect would emerge only over the medium to longer term, as US oil majors and other global players begin investing in Venezuelan fields once sanctions are eased.
Jefferies expects Venezuelan oil production to recover gradually through 2027 and 2028. If this additional supply is not offset by output curbs from OPEC+, it could exert downward pressure on oil prices over the coming years. For now, however, the focus remains on the pace and scale of any future production recovery.
For Reliance Industries, the primary upside would come from renewed access to heavily discounted Venezuelan crude. Venezuelan oil is typically heavy, sour and acidic, and can be processed efficiently by only a limited number of complex refineries worldwide. Reliance’s Jamnagar refinery is among the few facilities technically capable of handling such challenging grades.
Historically, because of these processing constraints, Venezuelan crude has traded at a discount of about $5 to $8 per barrel compared to Brent. In 2012, Reliance had entered into an arrangement with Venezuela’s state oil company PDVSA to source roughly 20 per cent of its daily crude requirements from the country. This supply agreement was terminated in 2019 after US sanctions were tightened.
Jefferies notes that if Washington allows Venezuelan crude to be sold again on the global market, Reliance could once more secure long-term supply at discounted prices. This would help support its gross refining margins and cash generation at a time when the stock is trading at around 27 times FY24 earnings and approximately 14.7 times enterprise value to EBITDA.
For ONGC, the potential benefit is more closely linked to its balance sheet and overseas investments. The company has not received dividends from its Venezuelan assets for several years. Jefferies estimates that unpaid dues related to production from the San Cristobal field have now crossed $500 million.
If a US-led restructuring enables the repatriation of these funds, ONGC could recover a substantial sum. In addition, it could resume development of the Carabobo asset in the Orinoco Belt, where it holds an 11 per cent equity stake. This would add to ONGC’s consolidated net profit of around Rs 571 billion in FY24 and support its free cash flow to firm yield of roughly 15 per cent.
Jefferies also points out that ONGC shares currently trade at less than one times FY24 price-to-book value, suggesting scope for a re-rating if cash flows from Venezuela are restored. However, it flags risks such as lower Brent crude prices, weaker oil and gas realisations, or operational setbacks at key domestic fields like KG 98/2.
On the supply side, Jefferies reiterates that any relaxation of US sanctions is likely to have only a marginal impact on global crude prices in the short term, given Venezuela’s limited current output. The more significant story, according to the brokerage, lies in the medium-term supply response if capital and technology flow back into the country.
A separate assessment by Choice Equity Broking also highlights constraints on how quickly Venezuela can ramp up production. Years of underinvestment at PDVSA have severely curtailed output capacity. Even in an optimistic scenario, production may increase by only about 150,000 barrels per day during 2026, largely through operational improvements rather than large-scale new investments.
Any meaningful increase beyond that level would likely occur only in subsequent years, provided international oil companies commit substantial capital. Choice Equity Broking adds that Indian upstream firms could benefit if access to equipment, technology and funding improves, particularly at projects such as San Cristobal and Carabobo-1, where Indian companies operate alongside PDVSA.
Indian refiners could also gain from importing heavier Venezuelan crude, which typically trades at a discount to Brent and helps improve gross refining margins. Before sanctions were tightened, India was importing as much as 400,000 barrels per day of Venezuelan oil.
Taking these factors into account, Jefferies has reiterated its ‘Buy’ rating on both Reliance Industries and ONGC. It has set target prices of Rs 1,785 for Reliance and Rs 310 for ONGC, implying potential upside of about 12 per cent and 28 per cent respectively from their most recent closing levels.
Overall, while India may not experience an immediate or broad-based benefit from US action in Venezuela’s oil sector, select Indian refiners and upstream producers could stand to gain over time if sanctions are eased, investments resume and Venezuelan crude gradually returns to global markets.
