Who Wants Venezuela’s Oil Anyway?

Two crude oil tankers remain anchored on Lake Maracaibo in Venezuela. (Alejandro Paredes / AFP / Getty Images)

About the author: Ben Cahill is director for Energy Markets and Policy at the Center for Energy and Environmental Systems Analysis at the University of Texas at Austin.

The Trump administration is shifting its narrative on Venezuela. After three months of strikes on alleged drug trafficking vessels, the U.S. has partially blockaded Venezuela’s oil exports and President Donald Trump vowed to retake the country’s “oil, land, and other assets.”

Trump hasn’t said, however, whether his ultimate goal is to curtail narcotrafficking, pressure Venezuelan President Nicolás Maduro into stepping down, or enact regime change through military force. Regardless of the end goal, Venezuela’s oil resources are part of the story. But if there is a war over oil, will anyone enjoy the spoils?

Americans may be puzzled by Trump’s sudden interest in seizing Venezuelan oil resources. After all, the U.S. now produces more oil than any country in history, at about 13.5 million barrels a day. Venezuela may have been a formidable founding member of OPEC in 1960, but it is now a small fish. It produces just 900,000 b/d. New Mexico produces twice as much. Even Venezuela’s upstart neighbor Guyana will soon surpass it. After years of corruption, mismanagement, brain drain, and sanctions pressures, Venezuela has become a bit player in the global oil market.

Created with Highcharts 9.0.1The U.S. Dwarfs Venezuela’s Oil Production Crude oil production in some U.S. states exceeds that of Venezuela.Average crude oil production, Jan.-Sept. 2025Source: U.S. Energy Information Administration

Created with Highcharts 9.0.1U.S. TotalTexasNew MexicoNorth DakotaVenezuelaColoradoAlaska0250050007500100001250015000

Of course, the sharp decline of Venezuela’s oil industry could be reversed. The country has plentiful natural resources, especially in the Orinoco Belt, an interior region that has some of the world’s largest extra heavy crude deposits. Investment to restore operations at a few crude upgraders—facilities that convert extra-heavy crude to a synthetic oil that is lighter and easier to transport—could raise output by increments of several hundred thousand barrels a day. Well repair and rehabilitation could squeeze more production from aging fields.

After that, things get more difficult. One comprehensive study by the Energy Policy Research Foundation estimates that reviving the exploration and production of Orinoco Belt’s oil fields would require billions of dollars.

There is a past precedent for energy policy changes in Venezuela to spur investment. Following a period of low oil prices and declining production, Venezuela’s “apertura petrolera,” an initiative in the 1990s to attract foreign oil investors, featured new contract types and joint venture agreements. This produced an investment boom, and oil production soared to more than 3.3 million b/d by 1998.

Former President Hugo Chávez then decimated the industry in the 2000s by firing workers at the state-owned oil company PDVSA and raising royalty rates and taxes. He eventually expropriated assets from foreign investors that refused to accept these new terms.

The pendulum could swing back again. In the event of a genuine political transition, a new government in Venezuela would surely view an oil industry revival as one of the keys to economic recovery. Under the right investment conditions, Venezuela’s vast resource base would be an attractive prize to the industry’s largest operators. Chevron remains a vital producer in Venezuela, and several other American and European companies have extensive experience there. Asian investors could return as well.

But it is hard to predict such events with any confidence. Maduro’s government, despite inflicting economic decay and fomenting deep unrest, has proved remarkably resilient. And even if a transition occurred, the durability of any new investment regime would be doubtful. Investors would focus intently on terms related to contract sanctity and stability, as well as access to international arbitration.

Global context also matters. During the 2000s—a period of high oil prices dominated by concerns about “peak oil”—companies scrambled for access to resources and partnerships with national oil companies. But then the shale revolution in North America led to a massive reallocation of investment in the 2010s. The “supermajors” and large independents withdrew from many of the countries they had flooded into in the 1990s and 2000s, especially those with a combination of poor investment terms and high aboveground risk, such as Venezuela.

A recalibration similar to that of the 2000s could be on the horizon. Companies worried about overdependence on American shale oil and gas resources are looking at deep water exploration opportunities. Some are even considering new investments in Libya and Iraq. They may see investment conditions in Venezuelan as less attractive than other opportunities, even with a regime change.

For now, companies may prefer to watch and wait as a volatile situation unfolds. It will take some serious convincing for oil and gas investors to return to Venezuela. But never say never.

Guest commentaries like this one are written by authors outside the Barron’s newsroom. They reflect the perspective and opinions of the authors. Submit feedback and commentary pitches to ideas@barrons.com.