Future of Venezuela's oil: US actions could shape global energy markets

The dramatic weekend events in Venezuela have sparked a major shift in international geopolitics, particularly in the realm of energy. US President Donald Trump’s statement about the United States potentially “taking back” Venezuela’s oil has raised numerous questions about what this could mean for global oil markets and the future of the country’s energy sector. While the details remain unclear, the broader implications of US intervention could significantly affect oil production, geopolitical relationships, and energy security worldwide.

Despite Venezuela’s status as the world’s largest holder of crude oil reserves, its oil output has been in steep decline in recent years. Under now ousted president Nicolás Maduro, production has plummeted to less than 1 million barrels per day, a small fraction of the global supply. At its peak in the late 1990s, Venezuela’s oil output reached 3.5 million barrels per day, but mismanagement, corruption, and political instability under Maduro have caused the nation’s energy sector to collapse, an argument by Foreign Policy points out. 

In discussing the potential shift, President Trump has expressed intentions to use American oil companies to restore Venezuela’s oil infrastructure.

"We’re going to have our very large United States oil companies—the biggest anywhere in the world—go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country," he emphasised. 

This approach could bring much-needed investment into Venezuela’s economy, provided that a new, democratic government is established. A transparent and stable governance structure would allow multinational companies, such as ConocoPhillips and ExxonMobil, to recover billions in arbitration claims and attract long-term capital.

However, Trump's rhetoric also suggests a more troubling path. In another remark, he stated, “We’re going to be taking out a tremendous amount of wealth out of the ground,” indicating that the US may view Venezuela’s oil wealth as a way to recoup military expenses.

This perspective echoes an outdated model of resource control, one where great powers, like Britain in Persia, exert direct control over foreign oil through concessions or colonies.

Such an approach runs counter to the current oil system, which is defined by transparent, liquid global markets. The United States’ position as the world’s largest oil producer and net exporter has strengthened its energy security through these interconnected markets.

The idea that America must control foreign oil resources to benefit from them is outdated, the article points out. US energy security is better served by a robust global market, not by direct resource control.

Trump’s approach also threatens to undermine global energy markets. If the US pushes a mercantilist agenda, extracting wealth from Venezuela's oil sector, it risks damaging the open market system that supports US interests. In doing so, the United States could inflame regional tensions and damage its reputation internationally.

As noted, treating oil as spoils of war would do the opposite—weakening global markets, inflaming regional tensions, and eroding the credibility of US leadership at a moment when it matters most.

Venezuela’s oil sector, while in disrepair, has the potential to become a crucial player in global energy markets once more. However, the real question is not just how much oil Venezuela produces, but how the US approaches the rebuilding of the sector. 

Washington's support for a legitimate transition to democracy, fostering strong institutions and transparent markets, would benefit both Venezuelans and US interests in the long run, the article notes. On the other hand, if the US seeks to control the oil wealth through military intervention or resource extraction, it could leave lasting damage to both Venezuela and the broader global energy system.

By Sabina Mammadli