EIA Weekly Nat Gas Storage Update
EIA Weekly Nat Gas Storage Update
Tom Pawlicki
- Energy
Venezuela to Offer Small Impact on Oil Prices
By: Tom Pawlicki, Senior Specialist, Market Intelligence
Former Venezuelan President Maduro’s capture early Saturday morning by US forces started the initial clean-up of one of several geopolitical issues with which oil markets have been tracking. While initial reactions may anticipate the country’s oil production rising, it is likely to take a considerable amount of time and investment before production and exports from the country begin to rise.
In President Trump’s Saturday morning press conference after Maduro’s capture, he talked about the Maduro’s arrest as being a law enforcement action due to Maduro’s being an indicted drug warlord. However, President Trump also spent time discussing oil, both in regards to getting back prior US investments in Venezuela and with the investment that US companies are ready to make. Estimates today suggest a cost of at least $100 bln over 10 years.
It would be natural to assume that Venezuela will see potential increases in oil production, but that is unlikely as the country’s infrastructure is in a state of disrepair. Pipelines have been pillaged for scrap metal and drilling platforms have been dismantled and sold for parts. President Trump also said that the oil embargo would remain in place, which could indicate that Venezuelan oil will continue to have difficulty being exported. With Maduro’s unelected Vice-President Delcy Rodríguez taking over as acting president, it will remain to be seen whether she will be acceptable to US leadership and allow political conditions to stabilize. There is also the issue of neighboring countries to consider, with President Trump and Secretary of State Marco Rubio discussing Colombia, Cuba and even Mexico. Given those countries’ interconnections with Venezuela, the oil market may feel the need to maintain a degree of geopolitical risk premium. Those factors may better explain why oil prices rallied nearly $1.00/bbl today instead of falling.
The US EIA has published Venezuelan oil production data going back to 1997. It shows production reaching a peak of 3.41 mln bpd in December 1997 and a sharp decline in late-2002. The decline was the result of a large-scale oil and general strike organized by groups opposed to Hugo Chavez starting on December 2. Production was nearly flat for 12 years from 2004-2016 but started to decline in 2016 due to the price collapse in 2014-2015. In those two years, WTI oil prices fell from $107.70/bbl to $34.50/bbl due to a boom-bust cycle in US shale. That forced Venezuela’s investments in maintenance and oilfield development to drop substantially. President Trump in his first term added sanctions on Venezuela’s oil in 2018 &2019, which caused production to drop further.
Although prices are higher now compared to 2015 at $58/bbl, it’s uncertain whether that is high enough to encourage massive new investment, considering the political risks still inherent in the country. The oil market is also oversupplied due to OPEC+ increases in output in 2025. The cartel halted its production hikes during Q1 2026 which could offer support to oil prices, but a resumption of output hikes later in the year could put the idea of Venezuelan investment under pressure yet again. Venezuelan production has rebounded from lows made in 2020 but is still significantly below the levels from the 2000s and 2010s. Monthly waterborne exports show numbers around 300,000-400,000 bpd, with exports to the US typically reaching 100,000-200,000 bpd due to shipments from Chevron.
Some Venezuelan oil is shipped to China, but the exact quantities may be uncertain. Reuters data on waterborne shipments to China show an average of 82,000 bpd in 2025, which would equate to roughly 15 VLCC loadings during the year. That number seems small considering the constant use of a shadow fleet. China has been investing in Venezuela and spoke out against the capture of Maduro. The impact on China of a reduction in its influence in South America was discussed today by StoneX’s Arlan Suderman. China’s imports from Venezuela are uncertain, due to the transshipment through intermediary countries. China imported 779,000 bpd from Singapore in 2025 even though that country does not produce much crude oil. It is believed that most of China’s imports from Singapore are from sanctioned sources such as Russia, Iran and Venezuela and reclassified as coming from Singapore.
The lengthy time to repair and redevelop Venezuela’s oil industry should explain the relatively small and even positive reaction by the oil market today. It may also be worth considering past examples for analogs. The capture of Maduro is similar to Operation Just Cause in Panama to get Manuel Noreiga. Panama is not an oil producing country, but it is strategic because of the Panama Canal. The US started the operation on December 20, 1989 with oil at $21.21/bbl. Noreiga surrendered on January 3, 1990 with oil at $23.68/bbl. The price that day rose 79c/bbl, and prices finished the month of January at $22.68/bbl.
Small price moves were also seen during the overthrow of Muammar Gaddafi in Libya. It started on September 15, 2011 with the National Transitional Council being recognized as the official government. Prices were $89.40/bbl that day. Gaddafi was captured and killed on October 20, 2011, with oil prices at $85.81/bbl. Prices finished October at $93.19/bbl. Libya’s oil production had slowed to a trickle in the months leading up to Gaddafi’s end and rebounded to pre-crisis levels within six months.
While political conditions in Venezuela experienced a large change over the weekend, the country is unlikely to experience much immediate change in oil production. Assuming the government stabilizes and welcomes investment, that investment will take several years to bear fruit. Past examples suggest that oil prices don’t usually witness large reactions to these kinds of geopolitical events.
- Energy
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