Oil, Sanctions and the Price of Meddling

Venezuela’s long crisis lays bare American coercion in geopolitics, leaving countries like India paying the bill.

Venezuela has been in almost permanent political crisis since Nicolás Maduro secured a second six-year presidential term in May 2018. The election, organised by a pliant National Electoral Council (CNE), was widely condemned. Leading opposition candidates were barred, jailed or driven into exile; the judiciary and electoral machinery were bent to executive will; the armed forces stood loyally behind the president. The opposition-controlled National Assembly refused to recognise the result. So did America, much of Europe and several Latin American governments, which demanded detailed polling data that never arrived.

Yet Venezuela’s tragedy did not end with a disputed ballot. It merely entered a more punishing phase. What followed was not a neat morality play about democracy versus dictatorship, but a slow-motion collision between sanctions, geopolitics and oil. This has impoverished Venezuelans, hardened the regime and complicated the strategic calculations of distant powers such as India.

For over two decades Washington has sought to shape events in Caracas, often invoking democracy while pursuing more tangible interests. After Hugo Chávez nationalised the oil sector in the mid-2000s, American firms lost privileged access to one of the world’s largest hydrocarbon reserves. Under Maduro, America’s response shifted from diplomatic pressure to economic strangulation. Sanctions on Venezuelan oil, the country’s economic lifeline, were justified as punishment for democratic backsliding. Their practical effect, however, was to choke state revenues, worsen shortages of food and medicine, and push an already fragile society closer to collapse.

The hope in Washington, especially during Donald Trump’s presidency, was that economic misery would fracture the regime or provoke a popular uprising. It did neither. Instead, sanctions entrenched the ruling elite, empowered the security services and drove Venezuela deeper into the arms of America’s rivals. Russia and China stepped in where Western capital retreated. Since 2007 China has invested more than $60bn in Venezuela’s oil sector and continues to receive roughly 200,000 barrels of crude per day, sanctions notwithstanding. Russia, meanwhile, has sold over $20bn worth of arms to Caracas over two decades and provided diplomatic cover at critical moments.

Growing Pressure

This growing Sino-Russian footprint in America’s traditional ‘backyard’ has been deeply unsettling to Washington. Frustrated by the failure of multilateral diplomacy and covert pressure to unseat Maduro, America’s posture hardened. Maduro was charged with leading the so-called Cartel de los Soles, branded a foreign terrorist organisation by the United States. A bounty of $50m was placed on his head. American officials spoke darkly of Venezuelan gangs colluding with African jihadists to flood Europe with cocaine.

Alongside the rhetoric came a conspicuous military build-up. Carrier strike groups, amphibious assault ships, F-35 fighter jets, MQ-9 Reaper drones and thousands of troops were deployed in and around Puerto Rico and the Caribbean, within striking distance of Venezuela’s coast. Officially, these manoeuvres targeted drug trafficking. Unofficially, they looked like the search for a casus belli. But no invasion followed as Venezuela is not isolated enough, and the costs are too high.

For India, Venezuela’s crisis is an immediate strategic problem. Over the past decade New Delhi sought to diversify its energy supplies, reducing dependence on the Middle East by investing in oil-rich but politically risky states such as Venezuela. ONGC Videsh Limited (OVL), the overseas arm of India’s state-owned oil giant, holds a 40 percent stake in the San Cristóbal field and 11 percent in the Carabobo-1 project in Venezuela’s vast Orinoco heavy-oil belt.

American sanctions have turned those investments into liabilities. Oil and cash flows have been blocked; dividends frozen; assets stranded. OVL has struggled to repatriate earnings or scale up production beyond a modest 12,000–15,000 barrels per day. Even proposals from Maduro to transfer greater operational control to OVL provided India secured waivers from Washington have proved impractical. Unlike Chevron, which enjoys a bespoke licence from America’s Office of Foreign Assets Control, Indian firms have found little flexibility.

The consequences extend beyond Venezuela. With Iranian, Russian and Venezuelan crude all constrained by sanctions, India’s room to manoeuvre in global energy markets has narrowed sharply. Supply diversification, long a pillar of India’s energy security, has become harder and more expensive. Yet New Delhi is reluctant to protest too loudly. Relations with Washington are otherwise warm, shaped by shared concerns about China and cooperation in technology and defence. Oil, it seems, must take its place behind geopolitics.

This is the paradox of sanctions as modern statecraft. They are wielded as precise instruments of moral pressure, but often behave like blunt weapons. They rarely produce regime change. They frequently produce humanitarian suffering, strategic realignment and unintended collateral damage. In Venezuela they have weakened neither Maduro’s grip nor his foreign backers. Instead, they have accelerated the very multipolar drift that America professes to resist.

For India, the lesson is sobering. In a world where sanctions are increasingly unilateral, expansive and extraterritorial, economic sovereignty cannot be taken for granted. New Delhi will need stronger legal, financial and institutional mechanisms to shield its trade, energy and security interests from external coercion. That may mean alternative payment systems, diversified investment structures, and closer coordination with other affected states. It will also require diplomatic agility.

Venezuela’s oilfields lie half a world away from India. Yet the fumes from America’s sanctions policy travel far. They remind rising powers that in today’s geopolitics, access to energy is not just a matter of geology or markets but of power, pressure and the price one is willing to pay for independence.

(The author is a retired naval aviation officer and a defence and geopolitical analyst. Views personal.)