To understand what’s happening and what it means for U.S. consumers and the American energy industry, The Conversation U.S. checked in with Amy Myers Jaffe, a research professor at New York University and senior fellow at Tufts University who studies global energy markets and the geopolitics of oil.
What is the state of Venezuela’s oil industry and how did it get to this point?
Venezuela’s oil industry has experienced profound turmoil over its history, including a steady downward spiral beginning in 1998. That’s when a worldwide economic downturn took global oil prices below $10 per barrel at the same time as the Venezuelan public’s growing interest in reasserting local control of the country’s oil industry ushered in populist President Hugo Chávez.
In April 2002, Venezuelans took to the streets to protest the appointment of Chávez loyalists to replace the top brass of the national oil company, Petróleos de Venezuela. The chaos culminated in an attempted coup against Chavez, who managed to retake power in a matter of days. Petróleos de Venezuela’s workers then went out on strike, prompting Chávez to purge close to 20,000 top management and oil workers. That began a brain drain that would last for years.
In 2007, Chávez, standing in front of a banner that read “Full Oil Sovereignty, The Road to Socialism,” took over ExxonMobil’s and ConocoPhillips’ oil-producing assets in Venezuela. The companies had declined to accept new oil contracts at radically less profitable terms than they had in previous years.
After Chávez’s death in 2013, national economic chaos accelerated. By 2018, reports began to surface that roving gangs, as well as some oil workers struggling to survive, were stripping the industry of its valuable materials – computers, copper wiring, and metals and machinery – to sell on the black market.
U.S. sanctions added to the mix over the years, culminating in a drop in Venezuelan oil production to 840,000 barrels a day in 2025, down from the 3.5 million barrels a day it was able to produce in 1997.
A handful of international oil companies remained in the country throughout the turmoil, including U.S.-based Chevron, French-Indonesian firm Maurel and Prom, Spanish firm Repsol, and Italian firm ENI. But the political chaos, sanctions and technical mismanagement of the oil industry have taken a heavy toll.
Some estimates say that the country wouldn’t need a lot of investment to increase production to about 1 million barrels a day by 2027. But other analysts say that immediate investment of as much as $20 billion could only raise Venezuela’s production to 1.5 million barrels a day.
Most of the oil in Venezuela is very heavy oil and requires expensive processing to be able to be refined into usable products. The country’s leaders have claimed to have 300 billion-plus barrels of reserves.
The El Palito refinery in Puerto Cabello, Venezuela, is owned by the country’s national oil company. Jesus Vargas/picture alliance via Getty Images
What effect does Venezuela’s production have on prices that U.S. consumers pay for gasoline, natural gas, gas-fired electricity and other petroleum products?
In general terms, U.S. gasoline prices are influenced by global crude oil market levels. Sudden changes in export rates from major oil-producing countries can alter the trajectory for oil prices.
However, Venezuela’s recent export levels have been relatively small. So the immediate effect of changes in Venezuelan oil export levels is likely to be limited. Overall, the global oil market is oversupplied at the moment, keeping prices relatively low and in danger of falling further, even though China is stockpiling large oil reserves.
Venezuela did not export any natural gas. In the long run, a fuller restoration of Venezuela’s oil and gas industry could mean oil prices will have difficulty rising as high as past peaks in times of volatility and could potentially fall if oil demand begins to peak. And Royal Dutch Shell and Trinidad and Tobago National Gas Company have plans to develop Venezuela’s offshore Dragon natural gas field, adding to an expected glut of liquefied natural gas, often called LNG, in global markets in the coming years.
How much oil is coming to the U.S. now, and how would more imports of Venezuelan oil affect U.S. refiners?
The U.S. Gulf Coast refining center is known for its capability to process heavy, low-quality oil like Venezuela’s into valuable products such as gasoline and diesel. Already, refineries owned by Chevron, Valero and Phillips 66 are bringing in Venezuelan oil.
Before the U.S. seized Maduro, most of Venezuela’s exports were going to China, though about 200,000 barrels a day were coming to the United States under Chevron’s special license.
An oil tanker approaches a dock in Maracaibo, Venezuela, on Jan. 10, 2026. Margioni Bermúdez/AFP via Getty Images
Trump has said the U.S. will get between 30 million and 50 million barrels of oil from Venezuela, to be used “to benefit the people” of both countries. That’s about two or three days’ worth of U.S. oil production, and between one and two months’ worth of Venezuelan production. What effects could that have for the U.S. or Venezuela?
Some 20 million to 50 million barrels of Venezuelan crude oil is currently piled up in Venezuela’s storage tanks and ships in the aftermath of the U.S. blockade. Exports needed to resume quickly before storage ran out to prevent oil production facilities from needing to shut down, which could then require lengthy and expensive restart procedures.
The United States has been a major exporter of petroleum products in recent years, reaching 7.7 million barrels a day at the end of 2025.
Processing more Venezuelan oil might help make U.S. Gulf Coast refineries a bit more profitable by making more money on their refined products exports. But since there was no shortage of products in the U.S. market, I don’t expect consumers to see much savings.
But U.S. refineries only have so much capacity to refine heavy oil like Venezuela’s. And they have long-term contracts for oil from other suppliers. So they won’t be able to handle all of those 30 million to 50 million barrels. Some of it will either have to be sold abroad or put in the U.S. strategic petroleum reserve.
How does a potential increase in Venezuelan oil production affect U.S. domestic oil producers?
Over time, the impact of the restoration of Venezuelan oil production on oil prices is hard to predict. That’s because it will likely take a decade or more before Venezuela’s oil production levels could be fully restored. Long-term oil prices are notoriously tricky to forecast.
Generally speaking, U.S. shale production rates and profitability benefit when oil prices are above $50 a barrel, as they have been since 2021. U.S. oil production rose to 13.8 million barrels per day for the week ending Dec. 26, 2025, up slightly from the end of 2024. Forecasts suggest a slight increase in 2026 as well, if oil prices stay relatively flat.
Longer term, all bets are off, since the Organization of the Petroleum Exporting Countries, or OPEC – a group of countries that coordinate global petroleum production and sales – has a history of telling members not to increase production when they add new oil fields, which sometimes leads to so much disagreement that a price war erupts.
The last time Venezuela moved to increase its production significantly, in the 1990s, oil prices sank below $10 a barrel. Major OPEC members like the United Arab Emirates have been expanding capacity in recent years, and others with large reserves like Libya and Iraq aspire to do the same in the coming decade as well. The UAE has been asking the group for permission to increase its production, causing difficulties in the group’s efforts to agree on what their total production and target oil price should be. That could be good news for consumers, if OPEC disunity leads to higher supplies and falling prices.
Some commentators have suggested China could be the biggest loser if shipments of Venezuelan oil shift West and away from discounted sales to China. How does the current situation affect China’s energy security and geostrategic considerations?
China’s oil imports have been averaging about 11 million barrels per day, with about 500,000 to 600,000 of that coming from Venezuela. Iran and Russia are among China’s largest oil suppliers, and both countries’ industries face tightening U.S. sanctions. There is enough oil available on the global market to provide China with what it wants, even if it doesn’t come from Venezuela.
The real question is about China’s overall response to the U.S. intervention in Venezuela. Beijing’s initial reaction to Maduro’s removal was fairly muted. In a Dec. 31, 2025, speech, however, China’s President Xi Jinping said China’s defense capabilities and national strength had “reached new heights” and called for the “reunification of our motherland.” In light of the U.S. intervention in the Americas, China may see a justification to move more aggressively toward Taiwan.
Why Unlocking Venezuelan Oil Won’t Mean Much for US Energy Prices was originally published by The Conversation and is republished with permission.
