Trump's plan to seize and revitalize Venezuela's oil industry faces
major hurdles
[January 05, 2026]
By JOSH FUNK
President Donald Trump's plan to take control of Venezuela's oil
industry and ask American companies to revitalize it after capturing
President Nicolás Maduro in a raid isn't likely to have a significant
immediate impact on oil prices.
Venezuela's oil industry is in disrepair after years of neglect and
international sanctions, so it could take years and major investments
before production can increase dramatically. But some analysts are
optimistic that Venezuela could double or triple its current output of
about 1.1 million barrels of oil a day to return to historic levels
fairly quickly.
“While many are reporting 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, who is the lead petroleum
analyst at gasoline price tracker GasBuddy.
American oil companies will want a stable regime in the country before
they are willing to invest heavily, and the political picture remained
uncertain Saturday with Trump saying that the United States is in charge
— while the current Venezuelan vice president argued, before Venezuela’s
high court ordered her to assume the role of interim president, that
Maduro should be restored to power.
“But 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
the Price Futures Group.
And if Venezuela can grow into an oil production powerhouse, Flynn said
“that could cement lower prices for the longer term” and put more
pressure on Russia.
Speaking to reporters on Air Force One on Sunday, Trump said oil
companies are “going to go in and rebuild this system.”
A major shift in oil prices wasn’t expected because Venezuela is a
member of OPEC, so its production is already accounted for there. And
there is currently a surplus of oil on the global market.
The price of U.S. crude oil lost 23 cents early Monday to $57.09 per
barrel. Brent crude, the international standard, gave up 18 cents to
$60.57 per barrel.
Proven reserves
Venezuela is known to have the world's largest proven crude oil reserves
of approximately 303 billion barrels, according to the U.S. Energy
Information Administration. That accounts for roughly 17% of all global
oil reserves.
So international oil companies have reason to be interested in
Venezuela. Exxon Mobil didn’t immediately respond to a request for
comment Saturday. ConocoPhillips spokesperson Dennis Nuss said by email
that the company “is monitoring developments in Venezuela and their
potential implications for global energy supply and stability. It would
be premature to speculate on any future business activities or
investments.”
Chevron is the only one with significant operations in Venezuela, where
it produces about 250,000 barrels a day. Chevron, which first invested
in Venezuela in the 1920s, does business in the country through joint
ventures with the state-owned company Petróleos de Venezuela S.A.,
commonly known as PDVSA.
“Chevron remains focused on the safety and wellbeing of our employees,
as well as the integrity of our assets. We continue to operate in full
compliance with all relevant laws and regulations,” Chevron spokesman
Bill Turenne said.
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But even with those massive reserves, Venezuela has been producing
less than 1% of the world's crude oil supply. Corruption,
mismanagement and U.S. economic sanctions saw production steadily
decline from the 3.5 million barrels per day pumped in 1999 to
today's levels.
The problem isn't finding the oil. It's a question of the political
environment and whether companies can count on the government to
live up to their contracts. Back in 2007, then President Hugo Chávez
nationalized much of the oil production and forced major players
like ExxonMobil and ConocoPhillips out.
“The issue is not just that the infrastructure is in bad shape, but
it’s mostly about how do you get foreign companies to start pouring
money in before they have a clear perspective on the political
stability, the contract situation and the like,” said Francisco
Monaldi, who is the director of the Latin American energy program at
Rice University.
But the infrastructure does need significant investment.
“The estimate is that in order for Venezuela to increase from one
million barrels per day — that is what it produces today — to four
million barrels, it will take about a decade and about a hundred
billion dollars of investment,” Monaldi said.
Strong demand
Venezuela produces the kind of heavy crude oil that's needed for
diesel fuel, asphalt and other fuels for heavy equipment. Diesel is
in short supply around the world because of the sanctions on oil
from Venezuela and Russia and because America's lighter crude oil
can't easily replace it.
Years ago, American refineries on the Gulf Coast were optimized to
handle that kind of heavy crude at a time when U.S. oil production
was falling and Venezuelan and Mexican crude was plentiful. So
refineries would love to have more access to Venezuela's crude
because it would help them operate more efficiently, and it tends to
be a little cheaper.
Boosting Venezuelan production could also make it easier to put
pressure on Russia because Europe and the rest of the world could
get more of the diesel and heavy oil they need from Venezuela and
stop buying from Russia.
“There’s been a big benefit for Russia to see Venezuela’s oil
industry collapse. And the reason is because they were a competitor
on the global stage for that oil market,” Flynn said.
Complicated legal picture
But Matthew Waxman, a Columbia University law professor who was a
national security official in the George W. Bush administration,
said seizing control of Venezuela’s resources opens up additional
legal issues.
“For example, a big issue will be who really owns Venezuela’s oil?”
Waxman wrote in an email. “An occupying military power can’t enrich
itself by taking another state’s resources, but the Trump
administration will probably claim that the Venezuelan government
never rightfully held them.”
But Waxman, who served in the State and Defense departments and on
the National Security Council under Bush, noted that “we’ve seen the
administration talk very dismissively about international law when
it comes to Venezuela.”
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Associated Press writers Matt O'Brien, Ben Finley, Darlene
Superville and Rio Yamat contributed to this report.
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