Indian OMCs : Although Venezuela has the highest oil reserves, output is still low; will profit
Indian OMCs : According to a research released on Monday, Venezuela boasts the world’s greatest known oil reserves, but its utilization has been stalled by a lack of experience, underinvestment, political meddling, poor management, corruption, and sanctions.
A new era began on the other side of the year when the United States invaded Venezuela and took President Nicolas Maduro and his wife hostage.
Since taking office as president in 2013, Maduro has mostly governed the nation by decree. According to the PL Capital research, “this event would definitely create a short-term turbulence in the oil markets.”
With an estimated 303.8 billion barrels of known oil reserves in 2020, Venezuela leads the world, followed by Saudi Arabia with 297.5 billion barrels.
“Canada, Iran, and Iraq have the next three greatest reserves, which are far behind at 168.1 billion barrels, 157.8 billion barrels, and 145 billion barrels, respectively. To put things in perspective, the United States, the biggest user, has a pitiful 68.8 billion barrels of reserves, according to Swarnendu Bhushan, PL Capital’s research analyst.
However, Venezuela’s output has been very dismal owing to a number of problems; in November 2025, it produced barely 1 million barrels of oil per day (bopd), compared to 13.7 million in the United States and 9.7 million in Saudi Arabia.
According to Bhushan, Venezuelan output is really just one-third of what it was ten years ago.
The public has long been aware of Venezuela’s enormous reserves. With 3.7 million barrels per day in 1970, Venezuela was really one of the biggest producers of oil, second only to Saudi Arabia at 3.9 million barrels per day, but ahead of the United States at 11.7 million barrels per day and the former Soviet Union at 7.1 million barrels per day.
“What is certain in the meantime is that there isn’t a Harry Potter Elder Wand that could be used to instantly increase Venezuela’s oil output. It would take at least three to six months for even the first signs of this to show up, the research said.
The risk premium is anticipated to increase in the near future due to global concerns, and there may be a little increase as well, depending on how China and Russia react to this.
“We place our bets on upstream companies ONGC and Oil India with Brent at $60 per bbl.” With low oil prices, the oil marketing companies (OMCs) are expected to continue to be profitable, according to the research.
But the recent increase in the excise tax on cigarettes also points to a likely increase in the excise tax on gasoline and diesel, which OMCs are anticipated to absorb like in April 2025. This makes us cautious, particularly given the present high valuations, Bhushan added.