Shortly thereafter, US President Donald Trump pledged that the US would “run” Venezuela, a move that hinged on how the US would approach the country’s key commodity: oil.
He said, “We’re going to join our very large United States oil companies, which are the largest in the world, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country.”
How important is oil to Venezuela?
Venezuela’s fragile economy is exceptionally dependent on oil. Maduro’s government has been almost entirely dependent on hydrocarbons for state income.
Crude oil and related products such as petrochemicals account for about 90% of Venezuela’s export revenues. He helped keep the highly sanctioned and isolated government in power despite a severe economic crisis.
Venezuela has the world’s largest proven oil reserves, with more than 300 billion barrels available – more than Saudi Arabia. Although this accounts for less than 1% of global oil production, this figure was more than 10% of global production in the 1960s. Crude oil production has fallen by more than 70% since the late 1990s, and Venezuela now ranks 21st on the list of global producers.
Can be traced back to the fall of the government of former President Hugo Chávez. His socialist revolution in the 1990s and 2000s led to massive corruption in the state oil company, PDVSA, and government intervention in the oil sector, leading to a flood of foreign investment from the country.
Several accidents at its pipelines and oil refineries led to further difficulties, while US sanctions – extended since 2017 – further limited Venezuela’s oil production capacity.
PDVSA has stabilized oil production at about 1 million barrels per day, partly due to a US license that allows a limited number of foreign partners to operate in Venezuela and export oil.
How much have US oil companies invested in Venezuela?
During the 20th century, the US was a major partner for Venezuela’s oil sector, with its major oil companies investing heavily in the country.
After the Chávez revolution all but one left the country – Chevron.
Although sanctions affected its operations, Chevron was granted a special license by the Biden administration to resume Venezuelan oil exports under strict conditions in 2022. The idea was that an easing of Venezuelan sanctions would ease broader oil market pressures in the wake of Russia’s invasion of Ukraine.
In October this year, the Trump administration gave Chevron renewed authorization to produce oil in Venezuela, arguing that the American company was a vital partner for Caracas.
It stands as the most obvious and immediate beneficiary of any Trump move to allow further US investment into the country. About 3,000 people are already employed there. In a statement, the company said it would operate “in full compliance with all relevant laws and regulations.” It did not comment on any potential expansion plans.
Trump says that under his plan, big American oil companies will return to Venezuela. This may include companies like ExxonMobil and ConocoPhillips.
Chávez seized the assets of ExxonMobil, the largest US oil company, in 2007. ConocoPhillips projects in Hamaca, Petrozuata and Corocoro were also seized. Both companies won billions of dollars in compensation awards in international arbitration, but Venezuela has not paid. This is the basis of Trump’s repeated claims of “stolen oil”.
Trump said, “We built the Venezuelan oil industry with American talent, drive and skill, and the socialist regime stole it from us during the last administration, and they stole it through force.” “This is one of the largest thefts of American property in the history of our country.”
ConocoPhillips said it was “monitoring the developments in Venezuela and their potential impact on global energy supply and stability.” “It is too early to speculate on any future business activity or investment,” a spokesperson said.
Does the US really need Venezuelan oil?
The US is already comfortably the world’s largest oil producer, so at first glance, it may not seem obvious why Trump is so keen on Venezuelan oil.
The issue, however, is what type of oil the US produces. Its main product is light crude oil, rather than the heavier, gloopier grades, which its many refineries, particularly on the Gulf Coast, are equipped to refine. Refineries turn crude oil into petrol, diesel and other products important to the economy.
Although the US is a major crude oil producer, it still imports heavy crude oil from countries like Canada and Mexico to supply refineries optimized for those grades. This means that most of the crude oil produced in the US is actually exported.
According to the American Fuel and Petrochemical Manufacturers (AFPM) trade association, “Using the right type of crude oil keeps our refineries efficient, keeps costs down and maintains energy security.” “It would cost billions to retrofit refineries just to process U.S. crude — a risky investment that would take decades to permit, build and ultimately pay off.”
Although Venezuela’s production has fallen sharply, its vast reserves include the largest global reserves of heavy crude that US refineries need. Indeed, for decades Venezuela’s heavy crude oil fed US refineries.
This makes renewed access to Venezuelan oil extremely attractive for US companies.
Will Trump be able to fulfill his oil promise?
There are major legal and logistical questions over whether oil will start flowing from Venezuela again.
It is unclear which government will be formed in Venezuela in Maduro’s absence. It is also unknown to what extent the new government will facilitate US efforts to influence the country’s oil sector.
Then there is the question of the state of Venezuela’s oil infrastructure. Dan Brouillette, a former US energy secretary in the first Trump administration, says early reports suggest the country’s oil facilities will remain intact, but there is no guarantee that Venezuela’s vast reserves can be immediately exploited.
“The barrier has never been geology. It has been governance, sanctions, capital access and execution,” he wrote on LinkedIn. “If political change brings rapid stabilization and credible authority over PDVSA, the benefit is increasing supply over time, not a sudden surge.”
Although some foreign oil companies remain in Venezuela, sanctions have meant that the country’s oil facilities have not received the investment needed to remain up to date. The extent of new investment required may become clear in the coming months.
Another important question is the world’s desire for more oil. Prices have fallen over the past year and are expected to fall further in 2026 amid a glut of production. If Trump’s promise on Venezuela comes true, it would send even more oil into already saturated global markets.
What about China?
China has been an important political and economic partner of Venezuela for the past two decades.
China’s CNPC has a joint venture with PDVSA in the oil sector. Most of the oil produced in Venezuela is sent to China. However, despite the US’s absence, China has not greatly expanded its oil operations in Venezuela.
Beijing has sharply criticized the US’s removal of Maduro from power, calling it a violation of Venezuela’s sovereignty.
Editing: Ashutosh Pandey
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