Will The Venezuela Crisis Hit India Hard? Crisil Says There’s Little To Fear

Limited Global Oil Impact Despite Venezuela Unrest

Crisil Ratings has said that recent US action in Venezuela is unlikely to have any material impact on India’s global trade or the credit quality of Indian corporates. In a credit alert issued on Tuesday, the rating agency noted that even if the situation escalates and disrupts crude oil production in Venezuela, the impact on global oil prices would remain limited.

Venezuela accounts for only about 1.5 per cent of global crude oil supply. Due to this relatively small share, Crisil believes any disruption is unlikely to cause sustained volatility in crude prices. Supporting this view, Brent crude prices have remained largely stable in recent days, hovering slightly above USD 60 per barrel.

India’s Trade Exposure To Venezuela Remains Minimal

India’s direct trade exposure to Venezuela is also minimal. Imports from the South American nation account for less than 0.25 per cent of India’s total imports. Crude oil is the primary commodity imported, with India sourcing around 1 per cent of its crude oil requirements from Venezuela.

In FY2025, crude oil and allied products made up over 90 per cent of India’s total imports from Venezuela, valued at approximately ₹14,000 crore. While India imports nearly 85 per cent of its crude oil needs, making it sensitive to global price movements, Crisil does not expect any near-term adverse impact from the current situation.

Credit Profiles Of Indian Corporates Seen Stable

India’s exports to Venezuela are even smaller, amounting to under ₹2,000 crore in FY2025, or less than 0.1 per cent of total exports. These exports are diversified across pharmaceuticals, ceramics, textiles, and two-wheelers. Pharmaceutical exports stood at around ₹900 crore, representing less than 0.5 per cent of India’s total pharmaceutical exports.

Overall, Crisil Ratings does not foresee any material impact on the credit profiles of Indian companies with exposure to Venezuelan customers due to their limited trade links. However, the agency said it will continue to closely monitor developments. It added that increased investment in Venezuela’s vast untapped oil reserves, estimated at 303 billion barrels, or nearly 19 per cent of global reserves, could boost global supply over the medium to long term and potentially soften crude prices, offering a positive outlook for India Inc.

(This article has been syndicated from ANI)