Geopolitical tensions are set to roil global commodity markets as experts predict a significant surge in prices following recent US military action in Venezuela. The event, which occurred over the weekend, is expected to cause a gap-up opening for crude oil, gold, silver, and other key commodities when trading resumes on Monday, January 5.
Commodity Markets Brace for Volatility
Market analysts are sounding the alarm over potential price spikes driven by heightened uncertainty. Anuj Gupta, Director of Ya Wealth, stated that the attack is likely to fuel regional geopolitical tension, directly impacting commodity valuations. He anticipates a gap-up opening not just for crude oil, but also for gold, silver, copper, and gasoline.
Specifically for oil, Gupta forecasts that Brent Crude prices could reach between $62 and $65 per barrel on Monday. This marks a sharp rise from the previous trading session on Friday, where Brent futures closed below $61 per barrel and West Texas Intermediate (WTI) settled above $57.
The Petro-Dollar and Venezuela's Oil Wealth
Experts suggest the conflict has deep roots in the global oil trade and the dominance of the US dollar. Sandeep Pandey, Co-founder of Basav Capital, argues that the underlying motive for US involvement is to safeguard the petro-dollar system. He points out that Venezuela, under former President Hugo Chávez, began challenging this long-standing regime, a move that threatened US economic interests. The recent statement by former US President Donald Trump about controlling Venezuela's oil reserves is seen as a justification of this stance.
The conflict has thrown a spotlight on Venezuela's enormous, yet underutilized, oil reserves. The country possesses the world's largest proven oil reserves, estimated at over 303 billion barrels, which constitutes roughly 17% of global reserves according to OPEC data. This dwarfs the reserves of Saudi Arabia (267 billion barrels) and is more than six times that of the United States.
A significant portion of this resource lies in the Orinoco Belt, a vast region in northeastern Venezuela. Despite this wealth, years of US sanctions and chronic underinvestment have crippled production, which has fallen to approximately 1 million barrels per day.
Minimal Impact Forecast for India
Despite the anticipated global market turmoil, India is likely to remain largely insulated from the economic and energy fallout of the US-Venezuela conflict. This assessment comes from the Global Trade Research Initiative (GTRI), an India-based think tank.
GTRI notes that while India was a major buyer of Venezuelan crude in the 2000s and 2010s, with companies like ONGC Videsh having stakes in the Orinoco belt, trade relations have severely deteriorated. US sanctions imposed in 2019 forced India to halt oil imports and drastically reduce commercial engagement to avoid secondary penalties.
As a result, bilateral trade has shrunk to minimal levels. In the 2024–25 fiscal period, India's total imports from Venezuela stood at a mere $364.5 million, with crude oil accounting for $255.3 million. This represents a staggering 81.3% decline from the $1.4 billion worth of crude imported in 2023–24.
India's exports to Venezuela are also limited, totaling $95.3 million, primarily driven by pharmaceuticals worth $41.4 million. The GTRI report was released on Sunday, following the US operation that led to the detention of Venezuelan President Nicolas Maduro and his wife on charges including alleged narco-terrorism.
In conclusion, while the world watches commodity prices react to fresh geopolitical strife, India's strategic decoupling from Venezuelan oil over recent years appears to have shielded its economy from immediate direct impact.
