From The Economist (limited gift link)
Just hours after America captured Nicolás Maduro, Venezuela’s dictator, in a nighttime raid on January 3rd, President Donald Trump clarified his motivation. “The oil business in Venezuela has been a bust, a total bust for a long period of time,” he said. “We are going to have our very large United States oil companies…spend billions of dollars, fix the badly broken infrastructure…and start making money for the country.” The declaration had the sweet taste of revenge. Eighteen years ago, under Hugo Chávez, Venezuela nationalized assets belonging to American and other Western companies….
…But the president wants more than retribution. Decades of underinvestment and mismanagement have caused Venezuela’s oil production to fall by two-thirds since the late 2000s, to around 1m barrels a day (b/d). Restoring idle capacity, the thinking goes, would make Venezuela rich while lining American pockets. Better still, Venezuela sits on some 300bn barrels of oil—a fifth of the world’s reserves—implying production might rise further still, and for a while. The heavy, sour crude that the country harbours is precisely the type of which American refineries are chronically short, at a time when America’s relations with Canada, a supplier of the stuff, are strained.
What, then, is not to like about Mr Trump’s lunge for petroleum? Quite a lot, it turns out. In the immediate term, Venezuela’s crude output is more likely to fall than rebound. In December America declared a blockade on Venezuelan shipments ferried by blacklisted tankers; it then seized one of them. Exports have since cratered …Venezuela is also short of naphtha—a dilutant it needs to make its super-gloopy crude transportable—which is no longer coming through from Russia. Unless the blockade is lifted… Venezuela’s production will have to be curtailed further, to perhaps less than 700,000 b/d.
Output might recover in a few months if there is a smooth political transition and American sanctions on Venezuela, blockade included, are lifted (a big “if”). Basic maintenance and repairs might push the country’s crude output to 1.2m b/d by the end of 2026, estimates Kpler, a data firm…. To pump more, Venezuela would need to overcome three problems: a dire need for funds, a shortage of labour and a saturated global market.
Rystad Energy, a consultancy, estimates that $110bn in capital expenditure on exploration and production alone would be required to bring the country’s output back to where it was 15 years ago—twice the amount America’s oil majors combined invested worldwide in 2024.
https://www.economist.com/finance-and-economics/2026/01/04/donald-trumps-great-venezuelan-oil-gamble?giftId=Yzc4NmFkYjYtMDhhOC00YjgxLWFjNjgtYzk5YTdlY2M2YWU0&utm_campaign=gifted_article