Will the US military actions on Venezuela change global energy landscape?

In early 2026, the US took military actions against Venezuela, sparking global concerns over severe turbulence in the energy market.

Despite possessing the world's largest proven oil reserves, Venezuela's output has plummeted to low levels due to long-term mismanagement, lack of investment, and crumbling infrastructure.

Currently, the global oil market is characterized by ample supply, slowing demand growth, and OPEC+'s strong regulatory capacity, meaning the short-term supply shock from the strike is limited.

US President Trump has claimed he will push American oil companies to return to Venezuela on a large scale and rapidly restore production. However, this faces multiple practical obstacles, including the lifting of sanctions, massive investment requirements, lengthy timelines, political instability, and sovereign resistance, making it difficult to achieve.

Therefore, in the foreseeable future, this incident is unlikely to fundamentally alter the global energy supply-demand dynamics or the geopolitical structure.

The real challenges facing Venezuela's oil industry

Venezuela holds the world's largest proven oil reserves. According to data from the International Energy Institute (IEA), its reserves are approximately 303 billion barrels, accounting for 17.5 percent of the global total, far surpassing Saudi Arabia. As one of the founding members of OPEC, Venezuela's production in the 1970s reached as high as 3.5 million barrels per day, accounting for over 7 percent of global output.

However, since the nationalization policies and the strengthening of state control over oil companies under President Hugo Chavez in 1999, the industry has become increasingly politicized, with severe underinvestment and a brain drain of technical talent.

After 2017, US sanctions, which were imposed and subsequently escalated, delivered a fatal blow to its industry. By 2025, its daily production had shrunk to less than 1 million barrels, accounting for less than 1 percent of global output, which is entirely disproportionate to its reserve status.

Historically, the US has been the primary export destination for Venezuelan crude oil. However, US-Venezuela relations deteriorated completely during President Nicolas Maduro, with US sanctions reducing Venezuelan exports to the US to nearly zero.

Currently, Chevron is the only American oil giant maintaining limited operations in Venezuela, and its activities are strictly constrained by the US licensing system. Russia is a geopolitical ally of Venezuela, with Russian companies involved in cooperative projects and providing some support, though on a limited scale.

Limited short-term impact on international oil prices

Despite the military actions and political upheaval, international oil prices did not experience a panic-driven surge.

Global oil supply remains generally ample, and the market is not in a state of shortage. US shale oil production remains strong, and supply from non-OPEC+ oil-producing countries remains stable.

The OPEC+ alliance, led by Saudi Arabia and Russia, holds significant spare capacity. The organization decided in November 2025 to pause production increases in the first quarter of 2026, demonstrating its willingness and ability to maintain market stability, which is sufficient to hedge against potential supply disruptions from Venezuela.

Simultaneously, global economic uncertainty and the long-term trend of energy transition have restrained rapid growth in oil demand, reducing sensitivity to marginal supply changes.

Therefore, the market has judged this incident to be more of a regional political crisis rather than a systemic supply crisis, making it difficult to shake the fundamentals of oil prices in the short term.

US oil companies face significant obstacles to a quick return

Following the military actions, Trump claimed he would push US oil giants to invest tens of billions of dollars to swiftly restore Venezuela's production, hinting at "taking over" its oil industry. However, this vision has very low feasibility in the short term.

First, the comprehensive US oil embargo on Venezuela remains in effect. Any large-scale investment hinges on the complete lifting of sanctions, which is tightly linked to the US's current policy objectives toward Venezuela, making adjustments complex.

Second, the investment required is massive and long-term. Industry experts estimate that restoring production to a certain level could require investments ranging from tens to hundreds of billions of dollars, with a timeline of five to ten years. Given the extremely high political risks, private oil companies will be very cautious in their investment decisions. Venezuela's oil facilities are dilapidated, its power system is fragile, and it even relies on paper records for operations, making restoration a monumental task.

Third, following the military actions, Venezuela faces the risks of a power vacuum, potential internal unrest, and armed resistance. The lack of a stable, legally recognized entity capable of signing and guaranteeing long-term contracts is a fatal flaw for foreign investment.

At the same time, oil resources are a core symbol of sovereignty in Venezuela, and any actions perceived as a "US takeover" will trigger strong nationalist backlash and international legal disputes.

The histories of Iraq and Libya demonstrate that forced regime changes rarely lead to a swift and stable recovery in oil production. Currently, only Chevron holds a relatively advantageous position due to its existing presence, while other US giants are adopting a wait-and-see approach.

The US military actions on Venezuela intensified the geopolitical risk premium in global energy markets and reminded all major energy-consuming nations of the necessity to place energy security at the core of their strategies.

The future global energy landscape will be less driven by single events and more determined by the complex interplay of global supply and demand evolution, energy technology transformations, policies of major producers and consumers, and geopolitical rivalries among great powers.

Liu Xu is an executive director of the Center for International Energy and Environment Strategy Studies at Renmin University of China.