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Despite holding the world’s largest proven crude oil reserves, Venezuela currently produces less than 1% of global oil supply due to decades of nationalization, mismanagement, and political interference. The recent capture of Nicolás Maduro has drawn global attention but has had little immediate impact on oil markets, as Venezuela’s degraded infrastructure and significant capital needs limit near-term production growth. While a long-term recovery could modestly increase supply and ease prices, Venezuela is unlikely to be a meaningful driver of energy costs for consumers in the near future.
Written by Steven Eilders, BMSS Manager
Many headlines over the last several weeks have included current events in Venezuela. Readers may be wondering why the country is becoming the focus of global attention, and what, if any, impact this development will have on the everyday consumer. While political instability and economic turmoil in Venezuela are not new, the capture of Nicolás Maduro has renewed questions about the future of one of the world’s most resource-rich nations.
Understanding the consequences requires looking beyond the headlines and examining Venezuela’s unique position in the global oil market, the historical decisions that shaped its energy sector, and the realistic prospects for oil production to recover in the years ahead.
Outlook for the Oil and Gas Industry Following Venezuela and Maduro’s Capture
Venezuela holds the world’s largest proven crude oil reserves, estimated at approximately 303 billion barrels. Despite this vast resource base, the country’s oil production has fallen dramatically and currently represents roughly 1% of global output. Venezuela was a founding member of the Organization of the Petroleum Exporting Countries (OPEC) and has long been described as a petrostate, a country whose government is heavily reliant on oil and gas exports, where economic and political power is concentrated among a small elite, and where institutions tend to be weak and corruption widespread. Other countries commonly categorized as petrostates include Algeria, Iran, Kazakhstan, Qatar, Saudi Arabia, and others.
Origins of Venezuela’s Oil Wealth
Venezuela’s current position in the global oil market is best understood through its mid-20th-century history. In the 1940s, Venezuela ranked among the world’s top three oil producers, prompting the Hydrocarbons Law of 1943, which expanded state control and required oil revenues to be split evenly with private companies. In 1960, Venezuela became a founding member of OPEC, and during the 1960s and early 1970s production peaked at 3.0 to 3.5 million barrels per day. By comparison, output in 2025–2026 has fallen to approximately 900,000 to 1.1 million barrels per day.
The industry shifted decisively in 1976 with the nationalization of oil production under President Carlos Andrés Pérez and the creation of Petróleos de Venezuela, S.A. (PDVSA). Initially benefiting from inherited infrastructure and expertise, PDVSA grew into one of Latin America’s most profitable companies before its later decline.
Policy Shifts Under Chávez and Maduro
Venezuela’s oil trajectory shifted sharply after Hugo Chávez took office in 1999. Ruling largely by decree, Chávez enacted a new Hydrocarbons Law in 2001 that expanded state control over PDVSA and emphasized higher oil prices over production growth within OPEC. A nationwide strike in 2002 proved pivotal: more than 12,000 experienced PDVSA employees were dismissed and replaced with political loyalists, severely eroding technical expertise and accelerating production declines. PDVSA increasingly functioned as a funding mechanism for social programs rather than a commercially focused oil company investing in exploration and production, particularly in the Orinoco Belt. These policies, largely continued under Nicolás Maduro, are often cited as a textbook case of Dutch Disease (in which reliance on a single resource sector undermines broader economic development), leaving Venezuela with vast reserves but chronically low output; by January 2026, the country accounted for only about 0.8% of global oil production.
What Comes Next and Implications for Consumers
Despite the scale of Venezuela’s oil reserves, worth trillions of dollars, the country’s oil sector remains severely degraded. Currently, Chevron is the only U.S. oil company operating in Venezuela, producing roughly 150,000 barrels per day. Decades of mismanagement have left infrastructure in disrepair, meaning that restoring production will require substantial time and capital.
According to estimates from Rystad Energy (independent energy research company headquartered in Oslo, Norway), maintaining current production levels will require approximately $53 billion over the next 15 years. Increasing output to 2 million barrels per day would require an estimated $110 billion over 5–15 years, while returning to historical peak production levels could cost as much as $183 billion through 2040. U.S. oil companies remain cautious, particularly given prior nationalizations and unresolved arbitration claims – such as those held by ExxonMobil and ConocoPhillips, that total billions of dollars.
Given these constraints, Venezuela is unlikely to significantly influence oil prices in the short term. Following the capture of Maduro, global crude prices showed little immediate reaction, largely because Venezuelan production remains small relative to total global supply. In the short-to-medium term, any incremental Venezuelan crude entering the market could exert downward pressure on prices, particularly in an already well-supplied global environment with limited demand growth.
Over the long term, a substantial recovery in Venezuelan production could contribute to lower global oil prices unless offset by countervailing forces such as OPEC production cuts. We saw a recent example of this dynamic when crude prices crept higher amid escalating protests in Iran, driven by fears of a potential production pause from one of the world’s largest producers – concerns that have since leveled out. Other offsetting factors could include increased global travel, slower-than-expected electric vehicle adoption, or broader demand-side and geopolitical developments.
What This Ultimately Means for Consumers
Despite holding the world’s largest crude oil reserves, Venezuela currently produces less than 1% of global oil supply due to decades of mismanagement, nationalization, and political interference. As a result, recent political developments, including the capture of Nicolás Maduro, have had minimal impact on global oil markets and are unlikely to affect fuel prices or energy costs in the near term. Significant infrastructure deterioration, large capital requirements, and unresolved legal risks limit Venezuela’s ability to meaningfully increase production. While a sustained recovery could add supply over the long term and place modest downward pressure on prices, Venezuela remains a longer-term consideration rather than a near-term market driver for consumers and businesses.
If you have any questions or concerns, please reach out to your BMSS professional or our Oil & Gas team by visiting our website or calling (833) CPA-BMSS.