US-Venezuela Tensions Over Oil Amid Sanctions and Production Challenges
Venezuelan President Nicolás Maduro has accused the United States of applying pressure on Venezuela with the ultimate goal of seizing its oil resources. Maduro cited recent incidents including the seizure of a tanker and threats to other vessels as evidence of this intent.
The US has maintained sanctions against Venezuela since 2015, emphasizing that its top priority is to combat illegal drug trafficking rather than acquiring Venezuelan oil. Washington also continues to label Maduro's government as illegitimate.
Despite possessing the world's largest proven oil reserves estimated at around 303 billion barrels, Venezuela's current oil production stands at about 860,000 barrels per day as of November. This output is roughly a third of what it was a decade ago and constitutes less than 1% of global consumption.
Chevron is currently the only US oil producer active in Venezuela, operating under a 2022 license issued during the Biden administration. Previously, waivers granted during the Trump administration were extended for a time, and Chevron's production accounts for approximately 20% of Venezuela's oil output.
Restoring Venezuela's oil industry to previous levels would require investments amounting to tens of billions of dollars and could take up to a decade. Industry consultancy Wood Mackenzie estimates that with external management and moderate investment, Venezuela's output could rise to about 2 million barrels per day within two years.
US refineries stand to benefit from Venezuela's heavy crude oil; however, any expansion in refining capacity depends on the relaxation of sanctions, OPEC's policies, and future global demand. Consequently, a rapid relief in oil prices driven by Venezuelan production increases appears unlikely in the near term.
