The United States has launched a military strike targeting Venezuela’s oil sector, a region known for its substantial crude reserves. Following the operation, U.S. President Donald Trump announced the capture of Venezuelan President Nicolás Maduro and his wife, asserting plans to reconstruct the country’s oil infrastructure, which he estimates will cost billions of dollars and be financed by oil companies.
Venezuela holds some of the richest oil reserves globally, yet its output has drastically declined in recent years. According to data from the Organization of the Petroleum Exporting Countries (OPEC), the country currently produces about 1 million barrels of crude oil per day. This figure represents a sharp decline from the peak output of over 3 million barrels per day in the early 2000s, primarily due to reduced investment and the effects of U.S. sanctions.
The majority of Venezuela’s crude exports are now directed towards China, as U.S. political pressures have limited its trading partners. In contrast, the United States remains the world’s largest oil producer, generating approximately 13.5 million barrels per day, while Saudi Arabia and Russia follow with outputs of 10 million to 12 million barrels and 9.4 million barrels, respectively.
Venezuela is estimated to possess the world’s largest proven oil reserves, exceeding 303 billion barrels, which accounts for over 19% of the global supply. Most of these reserves are located in the Orinoco Belt, a vast area covering approximately 21,000 square miles in northeastern Venezuela.
The current operational landscape for U.S. oil companies in Venezuela is limited. Presently, only Chemron is active in the country, responsible for about 25% of Venezuelan oil production. Francisco J. Monaldi, director of the Latin America energy program at Rice University, notes that other major Western companies, such as Exxon Mobil and ConocoPhillips, withdrew from Venezuela following the nationalization of private oil interests by former President Hugo Chavez in 2006.
Since that time, multiple sanctions have been imposed by successive U.S. administrations on Venezuela’s oil sector. These sanctions are largely due to allegations of drug trafficking, terrorism, and human rights abuses. Under the Biden administration, the U.S. froze the assets of Venezuela’s state-owned oil company, Petróleos de Venezuela (PDVSA), further complicating the situation. Most recently, Trump called for a “total and complete blockade” on sanctioned oil tankers entering or leaving Venezuelan waters.
Despite the complexities, Chevron has maintained its operations in Venezuela due to a waiver granted in 2022, which was extended by Trump in 2023. The future of U.S. oil companies in Venezuela hinges on political stability and the establishment of favorable commercial conditions.
Should regime change in Venezuela occur, the potential for increased oil production could have significant implications for global oil prices. However, experts suggest that any immediate impact may be muted, given Venezuela’s currently limited output. In recent trading, oil prices fluctuated, with West Texas Crude falling to $57.32 a barrel, down from nearly $80 earlier in the year.
The U.S. has bolstered its Strategic Petroleum Reserve, providing a buffer against potential volatility in the global oil market. Nigel Green, CEO of the deVere Group, emphasized that while Venezuelan production represents a small share of the global output, the situation remains fluid, and significant disruptions could still influence prices.
In the longer term, the restoration of Venezuela’s oil production will likely require private investment. Monaldi notes that with adequate investment, the existing infrastructure could facilitate a rapid increase in output. However, any potential U.S. investment will depend on the political climate and the incentives offered by Venezuela to attract foreign energy producers.
As the situation develops, additional U.S. companies, including ConocoPhillips and Exxon Mobil, may consider re-entering the market if conditions become favorable. The outcome of the U.S. military strike and the future of Venezuela’s oil sector will be closely monitored by global markets and energy analysts.
