Oil, Power and Intervention: What Is Really Happening in Venezuela
- Economedia
- 1 day ago
- 2 min read
Venezuela’s recent intervention is less a story about politics and more a lesson in how economics quietly shapes global events. At the centre of it all is oil, an asset so valuable that it often determines control over supply chains, prices, and long-term economic influence.
It has the largest proved oil reserves and was not capable of exploiting them. Due to sanctions and lack of infrastructure, oil production was nowhere near its potential. The refineries were old, and production levels dropped, and despite the largest proved oil reserves, the economy was struggling.
Specifically, after the intervention carried out by the United States, it was announced that the extraction of oil in Venezuela as well as its exportation would continue but under the oversight of the United States. Effectively, while Venezuela continues to extract its own oil, the refineries, exportation, as well as the finances, are monitored. Even the flow of oil has been controlled as opposed to blocked.
There is also an obvious economic rationale for such a shift. U.S. refineries are capable of processing heavy oil, which Venezuela currently produces abundantly. Accessing such a good also ensures any refineries are guaranteed without necessarily depending upon another uncertain market, such as the oil supplies that had defined the Venezuelan economic relations with the outside world in the past.
The international oil markets were largely unaffected. The oil prices witnessed a slight downturn as traders considered this move a removal of uncertainty, as opposed to an impact related to supply. The Venezuelan oil couldn't, by itself, change the global oil prices, though putting this oil into a supply chain increases the already globally pressured market’s flexibility.
For India, the effects are more or less indirect. India was importing a substantial volume of Venezuelan oil, but it has since stopped due to sanctions. In the short run, there are going to be negligible effects, as the oil is primarily earmarked for the U.S. market. However, stable crude oil prices are going to be beneficial for India since it will reduce its inflation. In the long run, the Indian refining sector, which can refine heavy oil, might benefit if Venezuelan oil arrives on the market.
Ultimately, however, the case does point out the role which energy economics can and does play in shaping global markets and their effects.
Sources:
Reuters Why: Gold standard for neutral, factual reporting on oil markets and U.S. energy policy. Use for: U.S. regulation of Venezuelan oil, refinery benefits, global oil price reaction.
U.S. Energy Information Administration (EIA)Why: Authoritative data source on oil reserves, production capacity, and refinery compatibility. Use for: Venezuela’s largest oil reserves, underutilisation of capacity, heavy crude facts.
Al Jazeera (Energy & Economy reporting)Why: Strong explainer-style journalism that connects economics with global impact. Use for: Background on Venezuela’s oil sector decline and economic context.
Business Standard (India)Why: Reliable Indian business daily with clear global-to-India economic links. Use for: Impact on India’s oil imports, inflation, and long-term refinery benefits.
OPEC Annual Statistical Bulletin Why: Primary source for oil reserve rankings and global production data. Use for: Claim that Venezuela has the world’s largest proven oil reserves.
Author & Researcher: Purvansh Kaushik
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