Is India Safe from the US-Venezuela Tensions?

The recent news of the US bombing Venezuela and capturing President Nicolás Maduro has left many people scratching their heads. Why would the US take such an extreme step against a country that, on the surface, doesn’t seem like a major threat?

The answer lies deeper than just the headlines. This move ties back to oil, dollars and challenges to US dominance. Let’s take a closer look at why Venezuela became the target and what it means for the world, especially for countries like India.

Petrodollar: The 1974 Deal That Rules the World

To really understand what's going on today, we need to rewind to 1974. Back then, after the gold standard collapsed, the US made a historic deal with Saudi Arabia. In short, the US promised to provide military protection to Saudi Arabia in exchange for oil being traded in US dollars.

This was the birth of the petrodollar system, which tightly linked the US dollar to global oil trade. The deal effectively locked in worldwide demand for USD, allowing the US to print money to dodge financial crises without immediate consequences. This system gave the US an upper hand, letting it finance its own deficits by merely printing more money—and the world had to accept it.

Countries that Challenged the Dollar

As you can imagine, when countries tried to break free from the petrodollar system, they faced dire consequences. Let’s take a look at a few key players that tried to buck the trend—and what happened to them:

2000-2006: Saddam Hussein & the Euro

In the early 2000s, Iraq’s leader, Saddam Hussein, decided to sell oil in Euros, not dollars. This was a direct challenge to the petrodollar system. The US responded with a full invasion in 2003, citing weapons of mass destruction (WMDs).

While many believe this reason was a smokescreen, Saddam was captured and executed by 2006. His attempt to move away from the dollar didn’t end well.

2009-2011: Gaddafi’s Gold-Backed African Currency

Muammar Gaddafi, the Libyan dictator, proposed creating a new African currency backed by gold to replace the dollar. His vision was to reduce Africa’s reliance on the dollar and create a pan-African economic system.

 But in 2011, after escalating political unrest, NATO intervened, leading to Gaddafi’s brutal assassination. Some argue that his push for a gold-backed currency had something to do with his downfall.

2025-2026: Venezuela & the Yuan

Now, fast forward to Venezuela. This country, holding the world’s largest proven oil reserves, started selling oil in Chinese Yuan instead of US dollars. The US didn’t take kindly to this.

In response, Venezuela faced severe sanctions, and eventually, the US bombed the country and captured President Nicolás Maduro. This marked the latest chapter in the US’s relentless defence of the petrodollar.

Russia, China & the De-Dollarization Movement

Venezuela isn’t the only country challenging the dominance of the US dollar. Russia has been taking steps to sell oil in currencies other than the dollar, particularly the Chinese Yuan. As the geopolitical landscape continues to shift, more countries are seeking ways to free themselves from the dollar’s grip, and this has the US worried.

China, with its growing global influence, has been promoting the Yuan as an alternative to the dollar. Through initiatives like the Belt & Road Initiative (BRI), China is helping countries build infrastructure and encouraging them to use the Yuan for international trade. This is all part of China’s broader push to reduce the world’s reliance on the dollar and give the Yuan a more prominent role in international trade.

Is a Geopolitical Storm Looming in 2026?

The US’s actions in Venezuela, along with the growing de-dollarization trend, point toward a more turbulent geopolitical environment. Countries like North Korea, China and Russia have all voiced concerns about Venezuela’s ouster. As we look ahead to 2026, the US may continue to push back against de-dollarization, while countries like China and Russia accelerate their push for alternative currencies.

This could lead to more tension in global trade and finance, and we may see more countries moving away from the dollar. The US, however, is unlikely to give up its financial dominance easily. Whether this leads to a pause in de-dollarization or speeds it up further remains to be seen.

India’s Tough Spot

India, the third-largest oil importer in the world, relies on imports for ~88% of its oil needs. However, its dependence on Venezuelan oil has been cut long before the US ousted President Nicolás Maduro. Since May 2025, Indian refiners have steered clear of Venezuelan crude. While imports from Venezuela reached a peak of 130,000 barrels per day in April 2024, they dropped to zero by May due to US sanctions.

On the brighter side, the US is exploring avenues to revive Venezuela's oil production, which could bring cheaper oil into the market if sanctions are eased. This boost in production could be a win for Indian refiners, who would benefit from importing heavier Venezuelan barrels at a discount to Brent, helping them rack up higher Gross Refining Margins (GRMs).

However, if the US goes ahead with fresh tariffs on alternative sources like Russian oil, India could see its oil import bills shoot up. By 2024–25, Russian crude made up around 35–40% of India’s total imports during key months. This risk looms large in the context of a growing push for de-dollarization. As countries like China work to reduce their reliance on the US dollar, India’s oil bills could become even more unpredictable.

In short, while Venezuela remains a headline risk, it is not yet a portfolio risk for India. But India will need to adapt to this shifting landscape and find the right balance between its US ties and the rise of new economic powers like China.