Trump’s Venezuela Oil Takeover Plan Unlikely to Shake Global Prices Quickly, Analysts Say

BY COMFORT OGBONNA

President Donald Trump’s proposal to seize control of Venezuela’s oil industry and invite American energy companies to rebuild it following the capture of President Nicolás Maduro is unlikely to have a meaningful immediate impact on global oil prices, according to energy analysts and industry experts. While the plan has generated intense political and economic debate, Venezuela’s long-neglected oil sector would require years of rebuilding and massive financial investment before it could significantly alter global supply dynamics.

Venezuela’s oil industry has deteriorated badly after decades of mismanagement, corruption, and sweeping international sanctions. Although some analysts believe the country could eventually double or even triple its current production of about 1.1 million barrels per day, returning to anything close to its historic output levels would not happen overnight. Years of underinvestment have left pipelines, refineries, and production facilities in poor condition, limiting the country’s ability to quickly ramp up output even under new leadership.

“While many are reporting that 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,” said Patrick De Haan, lead petroleum analyst at gasoline price tracker GasBuddy. He noted that simply restoring basic operations would be a lengthy process, even before considering large-scale expansion.

Political uncertainty remains another major obstacle. American oil companies are unlikely to commit billions of dollars without confidence in a stable and internationally recognized government. As of Saturday, the situation remained fluid, with Trump asserting that the United States was effectively in control of the country, while Venezuela’s vice president argued that Maduro should be restored to power before the nation’s high court ordered her to serve as interim president.

Still, some market watchers believe that even a short period of stability could dramatically shift sentiment. “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,” said Phil Flynn, a senior market analyst at Price Futures Group. Over the longer term, Flynn added, a resurgent Venezuela could help anchor lower global oil prices and increase pressure on major producers such as Russia.

Oil markets were closed over the weekend, meaning there was no immediate price reaction to the developments. When trading resumes, analysts do not expect sharp moves. Venezuela is already a member of OPEC, and its current output is factored into the cartel’s production calculations. In addition, the global oil market is currently experiencing a supply surplus, limiting the price impact of future production increases.

Despite its struggles, Venezuela remains a prize for global energy companies. The country holds the world’s largest proven crude oil reserves, estimated at about 303 billion barrels, or roughly 17% of total global reserves, according to the U.S. Energy Information Administration. That enormous resource base explains why international oil companies continue to watch events in Venezuela closely.

Exxon Mobil declined to comment immediately on the situation. ConocoPhillips said it was monitoring developments but emphasized that it was too early to speculate on future investments. Chevron stands out as the only U.S. oil major with significant ongoing operations in Venezuela, producing roughly 250,000 barrels per day through joint ventures with the state-owned oil company PDVSA. Chevron, which has operated in the country since the 1920s, said it remains focused on employee safety and compliance with all applicable laws and regulations.

Even with its vast reserves, Venezuela currently produces less than 1% of the world’s crude oil supply. Production has plunged dramatically from about 3.5 million barrels per day in 1999, largely due to corruption, poor management, and U.S. sanctions. Analysts stress that the challenge is not locating oil but creating a political and legal environment in which foreign companies feel secure investing large sums of money.

The memory of past government actions looms large. In 2007, then-President Hugo Chávez nationalized much of Venezuela’s oil industry, forcing companies such as Exxon Mobil and ConocoPhillips out of the country. “The issue is not just that the infrastructure is in bad shape,” said Francisco Monaldi, director of the Latin American energy program at Rice University. “It’s mostly about how do you get foreign companies to start pouring money in before they have a clear perspective on political stability and contract enforcement.”

Rebuilding the industry would also be extraordinarily expensive. Monaldi estimates that increasing production from roughly one million barrels per day to four million barrels per day would take around a decade and require investments of about $100 billion. That level of spending would only materialize under conditions of long-term stability and strong legal protections.

Venezuela’s crude oil is particularly valuable because it is heavy, making it well suited for producing diesel fuel, asphalt, and other products used in heavy industry. Diesel supplies are currently tight worldwide, partly due to sanctions on oil from Venezuela and Russia and because lighter U.S. crude cannot easily replace heavy blends. Many refineries along the U.S. Gulf Coast were originally designed to process heavy crude from Venezuela and Mexico, and greater access to Venezuelan oil could improve efficiency and reduce costs.

An increase in Venezuelan production could also weaken Russia’s influence in global energy markets by providing alternative supplies of diesel and heavy oil to Europe and other regions. “There’s been a big benefit for Russia to see Venezuela’s oil industry collapse,” Flynn said, noting that Venezuela was once a major competitor in that segment of the market.

However, Trump’s plan raises serious legal and international concerns. Matthew Waxman, a Columbia University law professor and former national security official, warned that seizing control of another country’s natural resources could trigger complex legal disputes. “A big issue will be who really owns Venezuela’s oil,” he said, noting that international law generally prohibits occupying powers from exploiting another nation’s resources for their own benefit. Waxman added that the administration may argue Venezuela’s previous government did not legitimately control those resources, though he cautioned that such claims could face intense scrutiny.

For now, analysts agree that Venezuela’s oil riches remain a long-term story rather than an immediate shock to energy markets. Even under the most optimistic scenarios, meaningful production gains would take years, leaving global oil prices driven primarily by existing supply, demand trends, and broader geopolitical risks.