At a Glance
- Trump’s plan to take control of Venezuela’s oil industry after a raid on President Maduro.
- Venezuela currently produces about 1.1 million barrels of oil per day, but could double or triple with investment.
- Heavy-crude demand for diesel could see U.S. refineries benefit if output rises.
- Why it matters: A revival could shift global supply dynamics and apply pressure on Russia.
Trump’s proposal to seize control of Venezuela’s oil sector is unlikely to move prices immediately, but it could reshape the country’s future output and alter global oil dynamics.
Immediate Market Impact
Oil prices did not change over the weekend, and a major shift is not expected when the market reopens. Venezuela is an OPEC member, so its production is already factored into the organization’s calculations, and a global surplus remains.
Venezuela’s Oil Landscape
Venezuela holds the world’s largest proven crude reserves-about 303 billion barrels, roughly 17 % of global reserves-yet it produces less than 1 % of the world’s crude. Production fell from 3.5 million barrels per day in 1999 to today’s 1.1 million barrels per day due to corruption, mismanagement, and sanctions.
Patrick De Haan said:
> “While many are reporting Venezuela’s oil infrastructure was unharmed by U.S. military actions, it has been decaying for many many years and will take time to rebuild,”
American oil companies will need a stable regime before investing heavily. Phil Flynn noted:
> “If it seems like the U.S. is successful in running the country for the next 24 hours, I would say there would be a lot of optimism that U.S. energy companies could come in and revitalize the Venezuelan oil industry fairly quickly,”
He added that a revival could cement lower prices long term and pressure Russia.
Political and Legal Hurdles
The political picture remains uncertain, with Trump asserting U.S. control while Venezuela’s vice president argued for Maduro’s restoration. Seizing resources raises legal questions about ownership. Matthew Waxman wrote:
> “For example, a big issue will be who really owns Venezuela’s oil?”
> “An occupying military power can’t enrich itself by taking another state’s resources, but the Trump administration will probably claim that the Venezuelan government never rightfully held them.”
> “We’ve seen the administration talk very dismissively about international law when it comes to Venezuela.”
Future Outlook
Infrastructure needs huge investment. To raise output from 1 million barrels per day to 4 million barrels per day would take about a decade and roughly $100 billion.
| Year | Production (bpd) |
|---|---|
| 1999 | 3.5 million |
| 2023 | 1.1 million |
| 2025 (target) | 3-4 million |
Key Takeaways
- Trump’s plan won’t shift prices now but could revive 1.1 million bpd output.
- Heavy-crude demand for diesel makes Venezuelan oil attractive to U.S. refineries.
- Legal and political uncertainties could delay investment and affect global supply.
While the plan has no immediate market impact, the potential to revive Venezuela’s oil output could have lasting effects on supply, pricing, and geopolitical competition.
