The year 2026 is just nine days old, but the world stage has already seen its share of chaos since the new year started. On January 3rd, Venezuela’s President Nicolas Maduro was captured by U.S. special forces in a daring overnight raid in the Venezuelan capital of Caracas. As the dust from the raid began to settle, there was much uncertainty about Venezuela’s politics and direction, but one thing was for certain: the crisis is sure to affect global oil markets.
Venezuela’s role in the global oil trade
Although Saudi Arabia is the world’s largest oil producer, Venezuela actually has the largest proven oil reserves of any country on Earth (303 billion barrels versus Saudi Arabia’s 267 billion barrels.) This obviously makes Venezuela a critical strategic player in geopolitics.
Despite almost a quarter-century of tense relations with its northern neighbor, the U.S., Venezuela has continued exporting oil to the U.S. After all, American oil giant Chevron is famous for doing lots of oil business with Venezuela. Any conflict or political crisis involving Venezuela will have downstream effects to the global oil market due to its large reserves.
Venezuela’s constitution says that all mineral and hydrocarbon deposits in the country are owned by Venezuela, despite many foreign companies doing business in Venezuela to extract and export this oil globally.
The wealth produced by Venezuelan oil made the country much richer than its South American counterparts, which tampered some internal dissent over the past 25 years as Presidents Hugo Chavez and his successor Maduro both sought to tamper down any dissent in the country.
How the raid against Maduro has already affected oil
Although U.S. Presidents George W. Bush, Barack Obama, and Donald Trump have all pushed for leadership changes in Venezuela over the past 25 years, the U.S. never took decisive action until this past weekend.
During Trump’s first term, the U.S. made no decisive military moves against the country. The second term, however, has seen Trump claim that Venezuela “stole” American oil, with Trump stating, “Venezuela unilaterally seized and sold American oil, American assets and American platforms, costing us billions and billions of dollars.” He also added “This constituted one of the largest thefts of American property in the history of our country.”
As a result, the U.S. is now planning on getting intimately involved in the Venezuelan oil trade, a decision that has already affected global oil prices. Since the raid, oil prices fell for three days before rising for the last two days, showcasing immediate volatility on the news, along with unrest in Iran in the Middle East. That comes despite the fact that Saudi Arabia still clearly remains the largest exporter of oil.
The U.S. is setting up meetings with over a dozen oil industry executives, where the companies and the U.S. government will decide what to do with the Venezuelan oil industry. Venezuela’s new leader, Delcy Rodriguez is reportedly willing to work with the U.S. to ensure more favorable American oil terms.
What comes next for Venezuela and its oil
Much uncertainty remains on what will happen with the leadership change in Venezuela. Its new leader Delcy Rodriguez is likely to face internal dissent, both politically and militarily, if she concedes too much of the country’s oil policymaking to the Americans. However, it is clear that the U.S. is more likely to succeed in improving its access to Venezuelan oil. This should, in theory, reduce gas prices in the U.S. and abroad, if that oil can be brought into the global oil market. Venezuela was hit by a series of crushing sanctions by the U.S. and its allies over the past twenty years. If those sanctions are rolled back, it could be a boon for Venezuelan oil, helping the whole world benefit from its oil.
