The United States’ sudden military intervention in Venezuela and the capture of President Nicolas Maduro have raised the question whether Washington can effectively control Venezuela’s political direction while unlocking and monetising its vast oil reserves?
US President Donald Trump has asserted that the United States would “run” Venezuela until a “proper” transition of power is achieved.
With sanctions still in place, oil infrastructure in the South American nation remains severely degraded, and political legitimacy unresolved, Washington’s ambitions face numerous constraints.
How the Venezuela’s leadership structure collapsed
The crisis escalated dramatically over the weekend when US special forces carried out an overnight operation in Caracas that resulted in the capture of Nicolas Maduro and First Lady Cilia Flores.
The operation included strikes on Venezuelan military installations and culminated in the pair being flown to the United States.
Maduro and Flores have since been
charged in New York on drug- and weapons-related offences. The Trump administration framed the operation as a decisive break from the existing power structure rather than the beginning of an open-ended occupation.
Trump declared that the US would oversee Venezuela’s direction until a new leadership arrangement could be established.
Trump also warned that
the United States would not hesitate to act again if necessary, stating that the US was “not afraid of boots on the ground” when asked about deploying troops inside Venezuela.
While officials later indicated that no additional military operations were planned in the immediate term, the president’s remarks underscored the extent of US military leverage being applied.
The Venezuelan government described the operation as an attempt to seize “Venezuela’s strategic resources, particularly its oil and minerals” and accused Washington of trying to “forcibly break the political independence of the nation.”
How Caracas is softening towards Washington and vice versa
In the immediate aftermath of Maduro’s removal, US officials
moved quickly to outline a provisional framework for governance.
Rather than pushing for rapid elections, the administration prioritised administrative continuity and the safeguarding of key economic assets — especially oil infrastructure.
Central to this approach is Vice President Delcy Rodríguez, whom Trump advisers had identified weeks earlier as a possible transitional figure.
Rodríguez initially responded to the US action with strong criticism. However, US officials said they remained cautiously optimistic that she could be persuaded to cooperate.
By Sunday night, her public stance had softened, with Rodríguez calling for “cooperation” and stating that Venezuela would “prioritise” efforts toward “balanced and respectful international relations” with the US and neighbouring countries.
Behind the scenes, senior US officials — including US Secretary of State Marco Rubio, senior adviser Stephen Miller, and US Defense Secretary Pete Hegseth — have been involved in shaping the structure of a post-Maduro government.
US Interior Secretary Doug Burgum and US Energy Secretary Chris Wright have been tasked with engaging US energy firms about a potential return to Venezuela.
Trump’s assertion that the US would “run” Venezuela initially lacked clarity, but officials later suggested it referred to controlling the direction of political and economic reforms rather than direct administration.
The strategy relies heavily
on the US military’s offshore presence to enforce compliance.
Despite these explanations, questions remain unresolved.
The US has had no official diplomatic mission in Caracas since its embassy closed in 2019, and there is no existing American administrative infrastructure inside the country capable of supporting large-scale governance functions.
What Washington wants from Venezuela
The Trump administration has made clear that its leverage over Venezuela extends beyond diplomacy. Rubio, described by Trump as one of the officials involved in “running” the country, outlined Washington’s approach in an interview.
“What we are running is the direction that this is going to move moving forward,” Rubio said on ABC News.
“And that is, we have leverage. This leverage we are using.”
Rubio cited multiple tools, including the continued US military presence around Venezuela and a blockade of oil tankers intended to disrupt the country’s primary revenue stream.
An administration source confirmed that oil sanctions would remain in place for now, further constraining Venezuela’s ability to sell crude.
Senate Intelligence Committee Chair Tom Cotton detailed Washington’s expectations for any new Venezuelan leadership.
“When the president said the United States is going to be running Venezuela, it means that the new leaders of Venezuela need to meet our demands,” Cotton said on CNN.
Those demands include halting drug and weapons trafficking and removing foreign actors deemed hostile by Washington.
“We want them to expel the Cubans and the Iranians and the Islamic radicals, and we want them to return to the civilized world and be a good neighbor that contributes to stability, order and prosperity,” Cotton said.
Trump has also issued direct warnings to Rodríguez. In an interview with The Atlantic, he said, “If she doesn’t do what’s right, she is going to pay a very big price, probably bigger than Maduro.”
What we now of Venezuela’s oil wealth
Oil remains the central factor shaping Washington’s approach.
Venezuela holds roughly one-fifth of the world’s proven oil reserves and the largest reserves globally, yet its production capacity has deteriorated sharply over decades of underinvestment and mismanagement.
At its peak in the mid-2000s, Venezuela produced around 3 million barrels per day. Output has since fallen dramatically.
According to available estimates, production averaged around 1.1 million barrels per day last year, accounting for roughly 1 per cent of global supply.
Goldman Sachs analysts have cautioned that even with political change, Venezuela’s oil output is unlikely to rise significantly in the near term. In a January 4 note, analysts led by Daan Struyven said uncertainty around sanctions would shape the outlook.
“We see ambiguous but modest risks to oil prices in the short-run from Venezuela depending on how U.S. sanctions policy evolves,” the analysts wrote.
Goldman maintained its 2026 forecasts, projecting Brent crude at an average of $56 per barrel and West Texas Intermediate at $52. Venezuelan production is expected to remain flat at approximately 900,000 barrels per day in 2026.
While long-term output could increase, the analysts said any recovery would be slow.
“Any recovery in production would likely be gradual and require substantial investment,” they noted, estimating that production reaching 2 million barrels per day by 2030 could create “$4/bbl of downside to 2030 oil prices.”
The type of crude Venezuela produces also presents challenges. Much of it is heavy and sour, making it harder and costlier to refine.
However, this crude is well suited for producing diesel and asphalt and can be blended with lighter oil, making it compatible with US Gulf Coast refineries.
Why US oil companies remain cautious
Despite
Trump’s promise that American firms would enter Venezuela to repair infrastructure and extract wealth, industry experts say significant barriers remain.
Venezuela’s oil sector was nationalised in the 1970s and further restructured in the 2000s, forcing foreign companies into joint ventures controlled by state-owned PDVSA.
Many firms exited rather than accept new terms, while others pursued arbitration claims. Legal disputes, security risks, decaying facilities, and unresolved sanctions have all discouraged reinvestment.
Mark Christian, director of business development at CHRIS Well Consulting, told Reuters that companies would not return without clear assurances. He noted that firms need certainty around payments, safety, and legal protections and would also wait for sanctions to be lifted.
Venezuela would also need to revise its legal framework to allow larger foreign stakes in oil projects. Without these reforms, large-scale investment remains unlikely.
Energy strategist Thomas O’Donnell outlined a narrow path to recovery. “If Trump et al can produce a peaceful transition with little resistance, then in five to seven years there is a significant oil-production ramp up as infrastructure is repaired and investments get sorted out,” he said.
However, O’Donnell warned of serious risks. “A botched political transition that has a feeling of U.S. dominance can lead to years of resistance,” he said, pointing to armed groups and guerrilla factions operating inside the country.
How unresolved disputes for US-based oil companies persist
Chevron is currently the only major US oil company operating in Venezuela, exporting around 150,000 barrels per day to US Gulf Coast refineries. The company has carefully navigated sanctions while maintaining its presence.
Chevron CEO Mike Wirth said in December that he had spoken with the Trump administration about maintaining an American presence in Venezuela across political cycles. The company has operated in the country for more than a century.
Chevron said it is focused on employee safety and asset integrity. “We continue to operate in full compliance with all relevant laws and regulations,” a spokesperson said.
ConocoPhillips and ExxonMobil both exited Venezuela nearly two decades ago and were involved in lengthy arbitration cases. Conoco is seeking more than $10 billion in compensation.
“The company that probably will be very interested in going back is Conoco, because they are owed more than $10 billion, and it’s unlikely that they will get paid without going back into the country,” said Francisco Monaldi, director of the Latin America Energy Program at Rice University.
Monaldi told Reuters that Exxon could also return, though it is owed less.
A Conoco spokesperson said the company was “monitoring developments in Venezuela and their potential implications for global energy supply and stability,” adding that it would be “premature to speculate on any future business activities or investments.”
What next for oil in Venezuela
Venezuela is a founding member of OPEC and once produced as much as 3.5 million barrels per day in the 1970s, accounting for more than 7 percent of global output at the time.
OPEC and its allies are currently expected to maintain existing output policies, having paused planned increases amid concerns about oversupply.
Ed Hirs, an energy fellow at the University of Houston, said recent events in Venezuela were unlikely to affect US oil and gasoline prices in the near term, noting that much of the country’s crude currently goes to Cuba and China.
Hirs also drew parallels with previous US interventions.
“Trump now joins the history of US presidents who have overthrown regimes of oil-rich countries. Bush with Iraq. Obama with Libya. In those cases, the United States has received zero benefit from the oil. I’m afraid that history will repeat itself in Venezuela,” he said.
Oil tankers chartered by Chevron were among the few vessels that had departed Venezuela in recent weeks, following Trump’s December announcement of a blockade.
While restarting crude flows to the US Gulf Coast could benefit refiners such as Valero, current conditions suggest exports remain constrained.
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With inputs from agencies
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