US President Donald Trump has said the United States will tap Venezuela’s oil reserves after seizing President Nicolás Maduro, stating that Washington will run the country until what he described as a safe transition is completed, a move that has raised questions over whether the plan can deliver meaningful increases in oil output.
Trump has called on American oil companies to invest billions of dollars in Venezuela, which holds the world’s largest proven crude reserves, to mobilise what he described as a largely untapped resource. He said US firms would repair Venezuela’s oil infrastructure and begin generating revenue for the country.
Analysts and industry experts have warned that the plan faces significant obstacles and would require years of investment before production could rise in a material way.
Vast Reserves And Limited Production
Venezuela is estimated to hold around 303 billion barrels of proven oil reserves, the largest total globally. Despite this, current production levels are a fraction of that potential.
Oil output has declined sharply since the early 2000s, following tighter state control under former president Hugo Chávez and later the Maduro administration. Control over the state oil company PDVSA led to the departure of experienced staff and a steady deterioration of infrastructure.
Some Western oil firms remain present, including US-based Chevron, but operations have contracted as US sanctions expanded and oil exports were targeted to limit Maduro’s access to revenue.
Sanctions And Infrastructure Constraints
US sanctions, first introduced in 2015 under former president Barack Obama over alleged human rights violations, have restricted Venezuela’s access to foreign investment and critical equipment.
Callum Macpherson, head of commodities at Investec, said the country’s main obstacle is its deteriorated infrastructure.
According to the latest oil market report from the International Energy Agency, Venezuela produced about 860,000 barrels per day in November. That level is roughly one third of output a decade ago and represents less than 1% of global oil consumption.
Venezuela’s reserves are largely heavy, sour crude, which is more difficult to refine and is commonly used for diesel and asphalt. This differs from the lighter crude typically produced in the United States.
In the lead-up to the seizure of Maduro, the US also seized two oil tankers off Venezuela’s coast and ordered a blockade of sanctioned vessels entering and leaving the country.
Legal And Political Uncertainty
Homayoun Falakshahi, senior commodity analyst at data platform Kpler, said the primary hurdles for companies are legal and political.
Speaking to the BBC, he said oil firms would need agreements with a recognised Venezuelan government, something that would not be possible until a successor to Maduro is in place. Even then, companies would be committing billions of dollars based on confidence in the stability of a future administration.
Falakshahi said that even under stable conditions, the process would take months, beginning with contracts and followed by a gradual increase in infrastructure investment.
Costs, Timelines, And Global Impact
Analysts estimate it would take tens of billions of dollars and up to a decade to restore Venezuela’s former production capacity.
Neil Shearing, group chief economist at Capital Economics, said Trump’s proposal would have limited impact on global oil supply and prices in the near term.
He told the BBC that the number of hurdles and the length of the timeline mean oil prices in 2026 are unlikely to change significantly as a result of the plan. He added that companies would not invest until a stable government is in place and that production gains would take many years to materialise.
Shearing also said that even if Venezuela returned to previous output levels of around three million barrels per day, it would still fall outside the world’s top 10 oil producers. He noted that strong production among OPEC+ countries means global markets are not currently facing an oil shortage.
Oil Companies Weigh Their Options
Chevron is currently the only US oil producer operating in Venezuela, after receiving a licence in 2022 under former president Joe Biden that allowed limited activity despite sanctions. The company accounts for about one fifth of Venezuela’s oil production.
Chevron said it is focused on employee safety and is complying with all relevant laws and regulations. Other major oil companies have not publicly commented on Trump’s plan.
Falakshahi said oil executives are likely discussing the opportunity internally, weighing political risk against resource potential. He said investment decisions depend on the political environment and the scale of resources available, adding that despite uncertainty, the size of Venezuela’s reserves could still attract interest.
Featured image credits: Repsol YPF via Flickr
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