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EXPERT COMMENT

Robust long-term oil demand is needed to justify significant investment, but is called into question by the growing popularity of electric vehicles.

In a press conference following the US attacks on Venezuela, and the capture of President Nicolás Maduro, US President Donald Trump announced that American oil and gas companies would invest in the Venezuelan oil sector and extract the ‘tremendous amount of wealth’ in the ground. 

On 7 January, Vice President JD Vance stated that the US will ‘control the energy resources’ in the country, with US Energy Secretary Chris Wright saying that ‘We’re going to market the crude coming out of Venezuela’.

For the world’s leading military power to assert the right to develop the resources of another sovereign nation is extraordinary: a further step away from an international system based on rules and norms, towards one in which might makes right. But the American president sees economic opportunity. 

Venezuela is estimated to hold the world’s largest proven reserves of crude oil (19.4 per cent in 2024). But it is currently a minor producer, pumping 960,000 barrels of oil per day (b/d) in 2024 – around 1 per cent of global production – down from 3.3 million b/d in 2006. President Trump hopes to get Venezuelan oil flowing again. But this will not come cheap.

Venezuela’s oil production infrastructure is in a state of severe disrepair after years of underinvestment, corruption and sanctions. Tripling Venezuelan production by 2040, from 1 million to 3 million barrels of oil a day (b/d), would cost an estimated $183 billion, according to Rystad Energy.

Click here to continue reading the full version of this Expert Comment on the Chatham House website.