Securing energy resources appears to be a central consideration behind US actions in Venezuela. The country holds the world’s largest proven oil reserves and, according to Wood Mackenzie, has roughly 241 billion barrels of recoverable crude.

Proven Oil Reserves by Country (Billion Barrels)

Yet Venezuela’s production history highlights how difficult those barrels are to unlock. Output peaked near 3 million bbl/d in the late 1990s, before political upheaval, strikes, and sector restructuring under Hugo Chávez triggered a long decline. US sanctions imposed from 2017 onward accelerated the collapse, pushing production below 500,000 bbl/d by 2020. Limited sanctions relief in recent years supported a modest rebound, but output today remains around 800,000–900,000 bbl/d.

Historical Total Venezuelan Supply

Expectations of a rapid supply surge risk overstating what is feasible. Iraq took nearly a decade and more than $200 billion to return to pre-war production levels, while Libya has yet to regain its 2010 peak.

Venezuela faces even steeper constraints. Its reserves are dominated by extra-heavy crude, requiring upgrading and imported diluents for transport. Years of underinvestment, sanctions, loss of skilled labour, and the decline of state oil company PDVSA have taken a heavy toll. Aging infrastructure, repeated refinery outages, and limited access to modern drilling and upgrading technology continue to constrain any rapid recovery.

PDVSA has indicated that facilities were not damaged during recent events, suggesting limited immediate disruption. In the near term, oil markets appear able to absorb uncertainty. Inventories are adequate, and OPEC+ has signalled that its 1.65 million bbl/d of voluntary cuts could be reversed if needed.

A pro-US government could enable sanctions relief, renewed foreign investment, and a gradual recovery in exports. However, returning to 3 million bbl/d or more would take years and substantial infrastructure investment. President Trump has already indicated that US oil companies would help operate and develop the Venezuelan oil sector.

Oil markets are tightening structurally. Global consumption now exceeds 101 million bbl/d, led by the United States, China, and rapidly growing demand in India. From a market perspective, the near-term effect may be a temporary rise in geopolitical risk premia. Over time, sidelined Venezuelan supply, close to 1 million bbl/d, could weigh on oil prices and support risk assets.

Modern empires competition today is less about direct conflict than about control of inputs. Energy, metals, and critical materials function as the grain of the modern world. When leaders signal a willingness to secure those inputs directly, markets should read it not as rhetoric, but as resource strategy.

The US-China rivalry is fundamentally structural rather than ideological. The United States is energy-rich but dependent on imported metals and rare earths. China dominates metals processing but relies heavily on imported oil, sourcing roughly 70% of its crude abroad. Each is strong where the other is vulnerable, and both are seeking to weaponise that asymmetry.

Control over energy flows also has monetary implications. Influence over Venezuelan oil is not only about supply but about reinforcing the Petrodollar and preventing the rise of the Petroyuan.

There is also a regional dimension. China has steadily expanded its footprint in Latin America through infrastructure investment and commodity financing. Recent US actions suggest a push to reassert influence in the Western Hemisphere, forcing Beijing to compete under less favourable conditions. The Trump administration’s 2025 National Security Strategy identified the Western Hemisphere as a core priority, reviving the logic of the Monroe Doctrine, now known as the "Donroe Doctrine". The objective is to place the region’s strategic natural resources, particularly critical minerals and rare earths, under US-aligned corporate control, while building a Western Hemisphere supply chain that reduces reliance on China.

Indeed, much of South America is moving closer to Washington, leaving Brazil increasingly isolated. This matters because President Lula is a self-declared leftist who has consistently leaned toward Russia, China, and Iran. After Trump’s capture of Maduro, Kalshi odds show a 90% chance that Colombia and Peru’s presidents are "out” before 2027. In parallel, President Trump recently reiterated that Greenland should become part of the United States, underscoring a broader strategy focused on securing critical assets.

A political transition in Venezuela would primarily affect assets linked to debt restructuring, energy infrastructure, and oil supply chains.

Venezuelan bonds currently trade around 25–35 cents on the dollar, reflecting sanctions risk and legal uncertainty. In a regime-change scenario, several analysts estimate recovery values in the 30–55 cent range, driven by restructuring and sanctions relief.

Source: Bloomberg

Ashmore remains one of the largest institutional holders of Venezuelan sovereign debt. Advisory firms such as Houlihan Lokey, financial advisor to the Venezuela Creditor Committee, and Lazard, a long-standing leader in sovereign restructurings (Greece, Ukraine), would likely benefit from the scale and complexity of any restructuring. In such cases, advisors earn success fees and act as “picks and shovels” to the process. Venezuela’s debt stack is widely viewed as among the most complex on record.

Restarting Venezuela’s oil sector would require rapid rehabilitation of ageing assets. Technip, the historical architect of much of Venezuela’s critical oil infrastructure, is well positioned given its proprietary knowledge, particularly if no-bid or sole-source contracts are used to accelerate repairs. Graham Corporation, which supplies vacuum ejector systems used in heavy-oil upgrading and refining, could also benefit, as processing Venezuela’s crude requires vacuum distillation to prevent it from turning into solid coke.

Before exports can scale, Venezuela must import large volumes of diluent (naphtha or natural gasoline) to move heavy crude through pipelines. Targa Resources, which operates the Galena Park Marine Terminal in Houston, a key LPG and naphtha export hub, would be a logical beneficiary if Venezuela shifts back toward US diluent supply, displacing Iranian flows.

In a typically Trumpian style, President Trump initially said the United States would “run” Venezuela during the transition. US officials confirmed that roughly 15,000 troops would remain positioned in the Caribbean, with further intervention left on the table should Venezuela’s interim leadership fail to meet Washington’s conditions.

Venezuela’s Supreme Court has appointed Vice President Delcy Rodríguez as interim president. Rodríguez, who has served as Maduro’s deputy since 2018, oversaw much of the country’s oil-dependent economy and its intelligence apparatus and sits firmly within the existing power structure. She offered “to collaborate” with the Trump administration in what could be a seismic shift in relations between the adversary governments.

Independent observers, including the UN and the Carter Center, concluded that Venezuela’s 2024 elections lacked credibility and failed to meet international standards. Verified tally sheets reviewed by independent analysts showed opposition candidate Edmundo González winning roughly 67% of the vote, compared with about 30% for Maduro.

At the same time, Nobel Peace Prize winner and Venezuelan opposition leader, María Corina Machado, is projected to return to the country this month, and has stated that the opposition is prepared to assume power. However, President Trump has publicly questioned the extent of her support among the Venezuelan population.