Venezuela's oil production, a critical feedstock for the global chemical industry, faces a complex landscape marked by fluctuating output, renewed US sanctions pressure, and burgeoning interest from India. Recent OPEC data reveals a slight dip in February's production, registering 892,000 barrels per day (bpd), a decrease of 18,000 bpd compared to January.

This contrasts with state-owned PDVSA's reported figures, highlighting persistent discrepancies in data reporting, particularly regarding the inclusion of natural gas liquids and condensates – crucial components for various chemical processes. While Venezuela's crude exports, including those destined for China and the US, saw an increase, operational bottlenecks due to shortages of light crude inputs have forced the country to resume imports of necessary blending components. This highlights the intricate logistical challenges facing the Venezuelan oil sector.

Despite these setbacks, Venezuela's production remains near its highest levels since the devastating 2019 US export embargo, which significantly curtailed the availability of Venezuelan crude for chemical manufacturing worldwide. Following the embargo, production plummeted to a historic low of 350,000 bpd in mid-2020 but has since demonstrated a degree of recovery.

However, the lingering effects of US sanctions continue to restrict PDVSA's ability to significantly expand production and exports. The recent non-renewal of General License 44 and the subsequent reinstatement of broader restrictions in April 2024, linked to political developments within Venezuela, further complicates the situation. These sanctions create uncertainty in the global chemical market regarding the consistent availability of specific crude oil fractions crucial for various chemical processes.

The potential return of Donald Trump to the White House could revive his "maximum pressure" strategy, leading to stricter sanctions or a ban on U.S. imports of Venezuelan oil. This could disrupt chemical industry supply chains and affect key feedstock prices. Additionally, concerns over Chevron’s operations in Venezuela have led to calls for revoking its operating license, further complicating the situation for companies dependent on Venezuelan crude.

Amidst these challenges, India has emerged as a potentially pivotal partner for Venezuela's oil sector.  Despite US sanctions, India has expressed a strong interest in increasing crude imports from Venezuela. Indian Petroleum Minister Hardeep Singh Puri recently suggested that Venezuelan oil availability could improve as international constraints ease, signalling a potential alternative source of feedstock for the burgeoning Indian chemical industry.

Venezuela has actively promoted investment opportunities in its energy sector, emphasizing its vast untapped reserves. Reliance Industries, India's largest refining conglomerate, has already secured US Treasury Department approval to import Venezuelan crude, and other Indian companies, including ONGC, are lobbying for similar authorizations.

Global energy firms are also exploring potential joint ventures in Venezuela's oil industry, though final approval from the US Treasury remains a crucial hurdle.  India's growing interest in Venezuelan crude positions it as a key player in the global chemical feedstock market, particularly given the uncertainties surrounding US policy and its impact on Venezuelan oil production and exports.  This dynamic could significantly influence the availability and pricing of specific crude oil fractions vital for various chemical processes.

The evolving relationship between Venezuela and India will be a crucial factor to watch in the coming years, as it will likely have significant implications for the global chemical industry's access to critical feedstocks.