Venezuela’s crude oil output is expected to rise gradually following the U.S. strike and the capture of President Nicolas Maduro, a development that analysts say could alter the long-term global oil supply picture even as short-term market impacts remain limited.
American forces seized Maduro in Caracas over the weekend, marking a decisive escalation in Washington’s long-running confrontation with the South American oil producer. President Donald Trump said the United States would take control of Venezuela, while making clear that the U.S. embargo on Venezuelan oil would remain fully in force. That dual signal, political upheaval without immediate sanctions relief, has left energy markets weighing future potential against near-term constraints.
Despite the dramatic geopolitical turn, oil prices have so far shown little reaction. Analysts say this reflects a widely held view that Venezuela’s oil comeback, if it happens, will be measured in years rather than months, and will require political clarity, regulatory stability, and massive capital investment.
Venezuela’s importance to oil markets lies in its reserves rather than its current output. The OPEC member holds about 17% of global proven oil reserves, roughly 303 billion barrels, according to the London-based Energy Institute, placing it ahead of OPEC leader Saudi Arabia. Yet its production capacity has been severely degraded over decades by underinvestment, operational failures, corruption, and sanctions.
In the 1970s, Venezuela produced as much as 3.5 million barrels per day, accounting for more than 7% of global supply at the time. Output fell steadily in the years that followed, dropping below 2 million barrels per day during the 2010s. Last year, production averaged around 1.1 million barrels per day — barely 1% of global output — underscoring how far the industry has declined from its peak.
Analysts say a political transition could arrest that decline and unlock gradual gains. JPMorgan analysts led by Natasha Kaneva said Venezuela could lift production to 1.3–1.4 million barrels per day within two years and potentially reach 2.5 million barrels per day over the next decade, from about 800,000 barrels per day currently. They added that these dynamics are not reflected in the back end of the oil futures curve, suggesting markets are underpricing the longer-term supply implications of a Venezuelan recovery.
Still, expectations remain tempered. Goldman Sachs analysts, led by Daan Struyven, cautioned that any recovery would likely be slow and uneven, requiring extensive rehabilitation of oil fields, pipelines, upgraders, and export terminals. Years of neglect have left much of Venezuela’s infrastructure in poor condition, while technical expertise has thinned following the exodus of skilled workers.
Goldman estimated that if Venezuela were able to raise production to around 2 million barrels per day, the added supply could shave about $4 per barrel off oil prices by 2030. That potential downside illustrates why Venezuela looms large in long-term market models, even if its immediate influence is muted.
In the short run, analysts say the key variable remains U.S. sanctions policy. Goldman said Venezuela’s production outlook this year depends heavily on how Washington recalibrates sanctions following the political transition. While the embargo remains in place, it limits access to financing, technology, and export markets, constraining how quickly production can respond.
“We see ambiguous but modest risks to oil prices in the short run from Venezuela depending on how U.S. sanctions policy evolves,” the Goldman analysts said, noting that uncertainty around licensing and enforcement will shape investment decisions.
That cautious view is reflected in price forecasts. Goldman left its 2026 outlook unchanged, projecting Brent crude to average $56 a barrel and U.S. West Texas Intermediate at $52. The bank also expects Venezuela’s oil production to remain flat at around 900,000 barrels per day in 2026, signaling limited near-term upside despite the political shock.
Beyond prices, analysts note that Venezuela’s reintegration into global oil markets would carry broader geopolitical and industry implications. A sustained recovery could complicate OPEC’s supply management efforts, particularly if Venezuelan barrels return at scale over the next decade. It could also reshape trade flows, especially in heavy crude markets, where Venezuelan grades compete with supplies from Canada and the Middle East.
For now, markets appear to view Venezuela less as an immediate disruptor and more as a long-dated wildcard. The country’s vast reserves represent a latent source of supply that could weigh on prices over time, but translating geology into barrels will require stability, capital, and policy clarity that remain uncertain.
As a result, the Venezuelan shock has become a story of deferred impact, dramatic in political terms, but incremental in market effect, with oil traders largely content to price the country’s potential into the distant future rather than the present.
