New Delhi: The ongoing geopolitical tension between the United States and Venezuela does not pose any immediate risk to India and that the country’s oil import bill is unlikely to rise under present conditions, a report said on Tuesday.
The report from Bank of Baroda said the import bill will remain unchanged as “global crude supplies are likely in a glut mode”, and Venezuela’s share of global production is marginal at about 1 per cent.
The bank maintained that Venezuela’s proven reserves are large, at roughly 19.4 per cent of the world total. Market conjecture that the reserves could be tapped by US to increase supplies has already softened crude prices in today’s trading.
“Given the current global supply scenario and surplus conditions, the report does not foresee any upside risk to India’s oil import bill in the near term,” it said.
Bilateral trade between India and Venezuela stood at $1.9 billion, with exports of $217 million and imports of $1.6 billion, and that petroleum, oil and lubricants account for the bulk of imports.
“For imports, Petroleum, Oil, and Lubricants (POL) occupy the major share especially crude petroleum. The unit value of India’s import of POL is also lower for Venezuela compared to major countries from which India imports oil,” said Dipanwita Mazumdar, Economist, Bank of Baroda.
India’s exports to Venezuela have declined at a 5-year CAGR of -8.8%, compared to 6.9% growth in India’s overall global exports, reflecting reduced trade momentum
The US leads Venezuela’s crude exports, followed by China and India, reinforcing the importance of oil diplomacy in ongoing negotiations
Venezuela offers one of the lowest unit values for crude oil imports among India’s major suppliers, helping contain import costs.
Analysts said in another recent report that any increase in the production of oil from Venezuela by US companies has the potential of lowering crude prices in the international market, benefiting all countries, including India. However, they noted geopolitical uncertainty in the region could deter large investments to pour into the Latin American country.
(IANS)
