Venezuelan Oil Riches Will Stay Mostly Theoretical

(Reuters Breakingviews) – The U.S. seizure of a sanctioned tanker has sharpened President Donald Trump’s standoff with Venezuela’s Nicolás Maduro. It does not, however, make the country’s 300 billion barrels of theoretical oil reserves – the world’s largest – any easier to turn into usable supply. Even if Washington’s pressure campaign leads to tangible political change, oil investors have little cause to overhaul their supply-demand assumptions.

A U.S. military buildup offshore has prompted RBC analysts to see outright regime change in the first quarter of 2026 as a possibility. If that ever occurred, one key focus would be what happens with the country’s oil operations, which in 2009 produced over 3 million barrels a day. In the context of daily global supply of around 100 million barrels, this is a market-moving amount that could prevent geopolitical shocks elsewhere from sending crude values soaring. While the International Energy Agency foresees a 2026 supply glut that could push Brent crude below its current $60 a barrel, a more balanced supply-demand picture later in the decade could lift it to $80 by 2028, Goldman Sachs analysts reckon.

Still, last month Venezuela exported only around 900,000 barrels a day. National output has been declining ever since 2006, three years after then-President Hugo Chávez fired 19,000 striking staff from PDVSA, the dominant state-owned oil company that controls everything from production fields to export terminals. In 2007 he expropriated foreign partners, gutting the sector’s expertise and capital. Much of Venezuelan oil infrastructure has deteriorated, and more recently U.S. sanctions have blacklisted PDVSA.

Optimists argue that lifting sanctions could unlock a quick increase of several hundred thousand barrels a day. Chevron, the only major U.S. company still operating in the country, has shown through its joint ventures that incremental gains are possible when Washington grants waivers. But larger increases require heavy investment and a stable operating environment, two things Venezuela has lacked for years. Wood Mackenzie estimates that $15 billion to $20 billion of investment would be needed by joint ventures operating in the main Orinoco Belt production area over the next decade to add just 500,000 barrels a day. Meanwhile much of the country’s resource base is heavy or extra-heavy crude that cannot flow without extensive processing. Only about 100,000 barrels a day of lighter oil could be restored quickly, Stifel analysts reckon.

The role of Venezuela’s military, which is tightly embedded in PDVSA operations, is especially important. In any contested transition, these armed forces could create the risk of disorder, especially as Washington shows little appetite for a prolonged ground deployment given Trump’s pledges to end wars. U.S. producers have little incentive to pour huge sums into the country amid low oil prices, and alternative supplies are readily available from Western Canada, according to Vortexa analysts. All of which suggests Venezuela’s oil riches may stay in the ground.

The U.S. has seized a sanctioned oil tanker off the coast of Venezuela, President Donald Trump said on December 10.

The seizure was the first interdiction of an oil cargo or tanker from Venezuela, which has been under U.S. sanctions since 2019. It came as the U.S. executes a large-scale military buildup in the southern Caribbean and as U.S. President Donald Trump pushes for Venezuelan President Nicolás Maduro to step down.

The U.S. is preparing to intercept more ships transporting Venezuelan oil, Reuters reported on December 11 citing six sources familiar with the matter.

Maduro used a rare press conference in September to claim that the U.S. was seeking regime change in his country, citing a naval deployment in the Caribbean.

(Editing by George Hay; Production by Streisand Neto)