Venezuela Power Shift Expected to Have Limited Short-Term Effect on Global Oil Prices

Analysts anticipate only modest movements in crude benchmarks following President Donald Trump’s removal of Venezuelan President Nicolás Maduro, concluding that ample global supply should mute any immediate shock to energy markets.

Production Constraints Temper Market Reaction

Venezuela, an Organization of the Petroleum Exporting Countries (OPEC) founding member, holds the world’s largest proven crude reserves. Despite that distinction, the country currently pumps fewer than 1 million barrels per day, representing under 1 percent of global output. Roughly half of that volume—about 500,000 barrels—is exported.

Given the small share of worldwide supply at stake, several research houses project only a marginal uptick of US$1 to US$2 per barrel in Brent futures when electronic trading resumes Sunday night. Brent settled Friday at US$60.75. Market participants also note that the first quarter typically features weaker consumption trends, adding to expectations that prices could drift lower once initial uncertainty fades.

Oversupply Sets the Backdrop

The global petroleum market heads into 2026 with significant buffers. OPEC and its partners, after years of coordinated restraint, have been raising output, while U.S. shale producers reached a record 13.8 million barrels per day. Against that backdrop, Brent dropped about 19 percent in 2025, and West Texas Intermediate declined nearly 20 percent—collectively the steepest annual slide in five years.

Risk consultants calculate that even if one-third of Venezuela’s production were interrupted, overall supply would remain more than adequate. As a result, traders are not treating the Caracas turmoil as a material disruption akin to past geopolitical flashpoints in major exporting nations.

Long-Term Outlook Could Tilt Bearish

While short-term threats appear contained, the leadership change opens the possibility that future Venezuelan output could expand sharply. Energy research firm MST Financial estimates that exports might reach 3 million barrels per day over the medium term if sanctions are lifted and foreign capital returns to the Orinoco Belt. Such a recovery would require extensive investment, modernizing infrastructure that has deteriorated under years of underfunding and U.S. embargoes.

Industry advisers point out that prospects for a large-scale rebuild remain uncertain. Companies still await repayment of debts owed by state oil company Petróleos de Venezuela S.A. (PDVSA), and memories persist of asset expropriations in the early 2000s. Until a stable legal and fiscal framework is established, most firms are expected to adopt a cautious stance despite the lure of enormous reserves.

Sanctions Stay in Place for Now

During a Saturday news conference, Trump confirmed that the existing embargo on Venezuelan crude remains active. He also pledged that U.S. corporations would invest billions of dollars to rehabilitate the nation’s energy sector, though he provided no timeline, named no companies, and offered no details about the interim governing structure.

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Consultants emphasize that political transitions in resource-rich states often face delays, policy reversals and security risks. They argue that no operator is likely to commit multi-billion-dollar capital until contract terms and taxation rules are clarified by a recognized administration.

Demand Uncertainties Shape Investment Calculus

Developing incremental Venezuelan supply would take decades and require sustained high prices to justify costs. Whether such investment will be warranted hinges on future consumption patterns. Earlier consensus projected global oil demand to peak within four years amid rapid electric-vehicle adoption and stricter climate policies. More recently, some governments have relaxed environmental targets while EV sales growth has slowed, prompting forecasters to lengthen timelines for demand plateau.

According to the International Energy Agency, policy shifts and slower clean-technology penetration could keep crude requirements climbing through the 2030s, making access to Venezuela’s reserves potentially attractive. Still, market watchers caution that oil producers will weigh demand scenarios against alternative investment opportunities, including low-carbon ventures, before allocating funds.

Key Metrics to Monitor

Traders and policymakers will track several indicators over the coming weeks:

• Status of Venezuelan export flows during the political transition
• U.S. Treasury guidance on sanctions relief or enforcement
• OPEC + production strategies in response to price movements
• Updates on infrastructure conditions at facilities such as the El Palito refinery near Puerto Cabello
• Commitments—or lack thereof—from international oil companies regarding future Venezuelan ventures

For now, consensus holds that the removal of Maduro, while significant politically, does not alter the core supply-demand balance that has pressured prices for much of the past year. Unless violence escalates or installations sustain damage, the market is expected to absorb the development with only brief and limited price volatility.

Crédito da imagem: Jesus Vargas | Picture Alliance | Getty Images