What US influence over Venezuelan oil really means for Asia

The significance of Venezuela’s current crisis, after Washington captured the country’s president in Caracas at the weekend, does not rest on barrels lost or prices gained. It rests on control.

Not operational control in the narrow sense, but influence exercised through sanctions policy, export licensing, shipping access and diplomatic authority.

For major Asian importers, particularly China and India, the distinction matters more than any short-term change in supply.

Venezuela’s oil sector has been in structural decline for years. Production has fallen from multi-million-barrel historical highs to roughly the one-million-barrel-a-day range, according to recent estimates that vary month to month.

In global terms, this is marginal. Markets can absorb it. This is why oil prices have remained relatively contained despite political upheaval.

Energy strategy, however, is not built around spot prices. It’s built around access under stress.

What’s changed is that Venezuelan oil now sits inside a framework where the United States exercises decisive gatekeeping power.

Through embargoes, licensing regimes, and control over shipping and financial channels, Washington has the ability to shape who can buy Venezuelan crude, under what conditions, and with what degree of continuity. This is influence without administration, but it’s influence nonetheless.

For Asian policymakers, this alters the character of Venezuelan oil.

Historically, Venezuela played a specific role in Asian energy planning. It offered geographic diversification away from the Middle East, crude grades compatible with complex refineries and supply relationships that operated largely outside US-centric energy governance. This independence was the point.

Asian buyers were willing to tolerate high political risk because Venezuela expanded the range of supply options available in adverse scenarios.

But this strategic quality is now diminished.

Once exports are mediated by US policy, Venezuelan oil no longer functions as an autonomous component of an Asian import portfolio. It becomes conditional supply. Access is no longer determined solely by commercial negotiation, but by regulatory permission and diplomatic context. From an energy security perspective, that’s a material downgrade.

China’s exposure highlights the consequences of this shift. Over the past two decades, Chinese policy banks and state-owned energy companies committed tens of billions of dollars to Venezuela through oil-linked lending, upstream ventures and infrastructure investment.

Those arrangements were premised on continuity: that long-term engagement would secure long-term access, even during political turbulence.

In practice, production shortfalls, governance failure and repeated renegotiations eroded that logic well before the current crisis.

What US influence adds is a new layer of uncertainty. Contractual rights now sit beneath a regulatory structure shaped outside Beijing’s control. Access can be constrained for reasons unrelated to operational performance or pricing. From a portfolio and risk-management perspective, that transforms Venezuelan exposure into a problem to be contained rather than expanded.

India’s experience is different in form but similar in outcome. Indian refiners have historically been pragmatic buyers, sourcing Venezuelan heavy crude when economics and compliance allowed.

At its peak, Venezuela was a significant supplier to India’s complex refining system. Over time, however, sanctions risk and policy uncertainty reduced those flows sharply. Recent US measures have reinforced that trend.

Under a US-shaped framework, Venezuelan supply becomes less flexible rather than more. Pricing may improve transparency, but optionality declines.

For Indian buyers focused on reliability and predictability, that makes Venezuelan crude less competitive than alternatives from regions where access is not filtered through an external power.

The broader implication concerns diversification itself. Asian energy strategy has long rested on the idea that spreading supply across regions and political systems reduces vulnerability.

Venezuela once supported that goal because it operated outside the dominant alliances shaping global oil flows. When that independence disappears, so does the diversification benefit. Venezuelan oil no longer reduces concentration risk; it increases exposure to a single policy center.

This distinction is not immediately visible in market data. Venezuela’s output is too small to move global balances decisively. But energy policy is shaped by tail risks rather than averages.

Planners ask who controls access during diplomatic breakdowns, sanctions escalation or conflict.

There’s also a capital allocation signal embedded in this shift. A US-influenced Venezuelan oil sector may, over time, operate with clearer rules, stronger compliance and improved operational discipline, which could raise efficiency.

It also removes the informal flexibility that once underpinned Asian engagement, including bespoke financing arrangements and politically negotiated supply terms. For Asian state capital and commercial investors alike, the return profile becomes less distinctive while constraints multiply.

These observations extend beyond Venezuela. Asian governments and firms are watching how quickly control over strategic assets can shift, how contracts are treated during political transitions, and how decisively foreign policy overrides commercial logic.

Those lessons will shape future investment decisions across Latin America, Africa and other resource-rich regions. Resource abundance without institutional durability now carries a higher discount.

The irony is difficult to miss. Venezuela still holds some of the world’s largest proven oil reserves. Asia remains the center of global demand growth. In purely economic terms, the relationship should be central. In strategic terms, it has become peripheral.

Asian responses will be incremental rather than declarative. China and India are unlikely to announce abrupt changes in policy. Instead, portfolio weightings will continue to adjust quietly.

Capital will flow toward suppliers offering predictability, institutional depth and insulation from great-power confrontation.

Exposure to politically mediated supply will continue to decline.

Nigel Green is the deVere Group CEO and founder.