On January 3, the US conducted a special military operation in Venezuela, resulting in the capture and removal from the country of President Nicolas Maduro and his wife, Cilia Flores, who are accused of drug and arms trafficking.
Venezuela has the largest oil reserves in the world — 304 billion barrels, which is approximately 20% of global reserves. Today, the country produces an average of 1.1 million barrels of oil per day (bpd), or just under 1% of global production. However, with the arrival of American companies, as promised by US President Donald Trump, oil production could increase, which could further intensify the downward pressure on oil prices, which have been falling steadily for the fourth consecutive year.
On the other hand, the arrival of Americans in Venezuela could lead to the departure of Chinese and Russian companies. According to various estimates, China and Russia have invested a total of about $40 billion in Venezuela in recent years. Accordingly, they are not happy with the unfolding events. Therefore, we can expect resistance from them to US efforts.
It is now clear that all this will have a direct impact on the global oil market, as all parties involved are among the largest oil producers and consumers. How they will affect the industry is a matter of debate among experts.
The US will take possession of the "Chinese" oil
On January 6, it became known that the Venezuelan and US authorities had reached an agreement on the export of Venezuelan oil to the US worth up to $2 billion. This was announced by Donald Trump. This involves approximately 50 million barrels of oil blocked by the Americans on the coast of Venezuela, which were intended for shipment to China.
This agreement is a clear sign that the Venezuelan government is responding to Trump's demand to open to American companies, Reuters notes.
Earlier, on January 4, during a press conference, the US president said that American oil companies would spend billions of dollars on rebuilding Venezuela's energy sector.
“We are going to bring in our largest oil companies, spend billions of dollars, rebuild the destroyed oil infrastructure, and start making money for the country,” he said.
He also said that the US would control Venezuela until power was transferred to a legally elected leader. However, it is unclear how the transfer of power will take place, under what conditions American oil companies will be able to return to the country, and who will get Venezuela's oil.
Trump said that Venezuela will transfer 30 to 50 million barrels of blocked oil to the US. “This oil will be sold at market price, and this money will be controlled by me, as President of the United States, to ensure that it is used for the benefit of the people of Venezuela and the United States!” he added.
China has been the largest buyer of Venezuelan oil over the past decade, especially after the US imposed sanctions on companies involved in oil trade with Venezuela in 2020. Venezuelan oil accounts for 5% to 8% of China's total oil imports. Several Chinese refineries are specifically designed to process the heavier and thicker oil produced by Venezuela.
“The Chinese invested about $20 billion in Venezuela and really hoped that the oil licenses they got would let them have some control over oil production and exports. The Russian company Rosneft exports about a third of all oil shipped out of Venezuela. Investments there are also estimated at nearly $17 billion. This means that if the Americans come in and start to establish control over these oil flows, then the interests of China and Russia will suffer," says oil and gas expert Mikhail Krutikhin.
According to him, Russian money came to Venezuela to support first former President Hugo Chávez and then Nicolás Maduro. In return, Russia received oil, which it mainly sold to China.
After January 3, the shares of several Chinese oil companies fell on the Hong Kong stock exchange. China National Offshore Oil Corporation lost about 4% of its value, and PetroChina lost 5%, according to Investing.com.
At the same time, shares of US oil companies Chevron, ExxonMobil, and ConocoPhillips rose on Monday.
The oil exchange reacted to events in Venezuela with a drop in prices. On Monday, January 5, during morning trading, March Brent futures fell 0.8% to $60.27 per barrel, and US WTI futures fell 0.9% to $56.82.
This was the industry's initial reaction to the unfolding events.
What next?
Venezuela's oil industry has long been in decline due to inefficient management, insufficient investment, and US sanctions. In 2025, its average production was 1.1 million barrels per day (bpd), which is a third of its peak level in the 1970s, Reuters notes.
At the same time, the country exports about 800,000 bpd. There are fears that these volumes may not reach buyers if unrest breaks out in the country and oil production stops. Then oil prices could jump.
However, some experts are confident that other producing countries and companies will be able to make up for this volume without any problems, as there is currently an oil surplus on the global market.
The US makes no secret of its interest in increasing Venezuelan oil production. But how quickly can it ramp up production? Analysts at Wood Mackenzie believe that Venezuela's oil industry is in dire need of additional operational and financial support. If sanctions are lifted and such support becomes available, it could have a significant impact on oil production in the country in both the short and long term.
Experts believe that some increase in production is possible relatively quickly, thanks to improved operational management. Many wells simply need major repairs. Production can be increased at a low operating cost.
Improvements in production processes and moderate investment in heavy oil production in the Orinoco region could bring Venezuela's production back to around 2 million bpd within one to two years. Significant investment is needed for further growth. Most of the facilities in this region were decommissioned between 2019 and 2021, and those that remain in operation require ongoing expenditure to maintain production.
According to Wood Mackenzie estimates, it will take the national company PDVSA (Petróleos de Venezuela, S.A.) and its international partners about 10 years to increase production by another 500,000 bpd.
The example of Iraq shows that regime change and the lifting of sanctions can lead to significant changes in oil production. In 2002, shortly before the invasion by Western forces led by the US, oil production in Iraq was around 2 million bpd. By 2019, it had more than doubled, reaching approximately 4.7 million bpd.
However, this growth occurred against a backdrop of steadily rising global demand for oil, mainly driven by China, and generally favorable pricing conditions. 2025 was a year of downward pressure on oil prices, caused by a slowdown in demand growth and increased OPEC+ production.
Another risk is related to the outlook for oil demand—it is becoming a relatively less important source of energy, says David Oxley, chief economist for climate and commodities at Capital Economics.
“Oil demand will not collapse sharply, but it is no longer growing as it used to. We believe it will remain low and start to fall in the late 2030s. Anyone investing in Venezuela's oil sector should ask themselves: is it worth it?” he says.
The US's claims against Venezuela are related not only to drug trafficking but also to the nationalization of US companies' assets, first in the mid-1970s and then again in 2007. At that time, foreign companies were forced to surrender their shares in PDVSA. Now, after Maduro's overthrow, if the US takes control of the Venezuelan government, American companies have a chance to regain their assets.
According to experts, ConocoPhillips can expect to settle more than $10 billion in arbitration claims and regain access to heavy oil reserves, ExxonMobil will have a chance to speed up the resolution of long-standing disputes and retain options for future participation, and Chevron looks to be the main beneficiary of the lifting of sanctions, increased production, and the return of billions in PDVSA debts. American oilfield services companies such as Halliburton and Schlumberger will also come to Venezuela.
Chevron stands to gain the most
Currently, Venezuelan oil flows are completely controlled by Chevron, which is the main partner of PDVSA (Petróleos de Venezuela, S.A.), Venezuela's national oil company.
Chevron exports between 100,000 and 150,000 barrels per day of Venezuelan oil to the US and is the only company that has been able to load and ship crude oil from this South American country without interruption in recent weeks, despite the blockade, experts note.
It is unclear whether Venezuela will have access to the proceeds from this shipment. PDVSA has been excluded from the global financial system, its bank accounts have been frozen, and it is prohibited from conducting transactions in US dollars.
Venezuela sells its flagship Merey crude oil at approximately $22 per barrel, less than Brent.
American oil refineries on the Gulf Coast can process heavy Venezuelan oil. Before sanctions were imposed in 2019, several large refineries purchased and processed about 800,000 bpd. Some refineries were designed to process this type of oil rather than light American oil.
In total, refineries on the US Gulf Coast are capable of processing 3 to 4 million barrels of heavy oil per day.
After sanctions were imposed on Venezuela, US refineries increased imports of crude oil from Canada, Mexico, Colombia, Brazil, and the Middle East. Experts believe that increased oil imports from Venezuela will displace this oil, especially Canadian oil. In 2025, Canada increased oil production to record levels, exporting about 90% of its oil to the US.
Until now, Chinese independent refineries have been the largest buyers of Venezuelan oil. Now they are likely to switch to Canadian oil, which will lead to increased costs, as Venezuelan Merey oil is the cheapest of the types they offer.
The US is unlikely to be interested in a further fall in oil prices. According to experts, the cost of oil in new American shale projects is $42 per barrel.
How should Kazakhstan respond?
We asked Askar Ismailov, advisor on Central Asia at the Global Gas Centre, to answer this question and share his assessment of the situation on the global oil market:
"I would temper expectations of a ‘quick market flood’. Venezuela is physically incapable of sharply increasing production in a few months. Even in optimistic scenarios, growth will be gradual because it requires investment, service, unblocking logistics, and a normal payment infrastructure. In 2025, Venezuela produced about 1.1 million bpd, and an increase to 1.5 million bpd is seen as a two-year horizon, not “tomorrow.” Moreover, recent events surrounding Venezuela are now more likely to create disruptions and uncertainty in exports than to guarantee stable growth in supplies.
What should Kazakhstan do if the external environment leads to lower prices? First, it should set a conservative price in the budget. If the baseline scenario for the world is around $55-65 per barrel of Brent in 2026, then planning expenses “at $70” is simply dangerous. Second, it is necessary to review plans for repair work at fields and adjust the scope of work where possible. Operating costs need to be controlled. Third, reforms in the gas industry are urgently needed. The lion's share of commercial gas is associated petroleum gas. Kazakhstan needs to increase production from gas and gas condensate fields. Without reform, this is impossible. The natural decline in production at these fields is approximately 1 billion cubic meters of gas per year. Under current conditions, in 5-7 years, all commercial gas in Kazakhstan may be tied to oil production, which increases the risks of the domestic gas supply.
The overall picture for 2026 looks like a market with a risk of surplus. The supply growth is mainly coming from non-OPEC+ countries (the US, Brazil, Canada, Guyana, etc.), while demand is growing moderately. In this balance, the base corridor, as I have already said, is $55-65 per barrel.
What could affect the oil market? Geopolitics, new sanctions packages, major supply disruptions, stricter discipline in OPEC+, and the gradual redirection of “gray” flows through new logistics schemes. Well, and we need to keep an eye on the situation in Iran, where mass protests are taking place. Previously, the country's authorities were able to resolve the situation, but this was without a one-off external blow. Now the probability is much higher, and in the event of internal unrest and external intervention, the situation in Iran could spiral out of control. This, of course, will have a major impact on the global oil market.
Meanwhile, Germany's DW reports that Trump has demanded that Venezuela's transitional authorities “expel” Russia, China, Iran, and Cuba from the country and sever economic ties with them. Caracas must also make the US its sole partner in oil production and give it preference in the sale of heavy oil.
As we can see, events are unfolding rapidly. However, market participants and traders seem to be taking them in stride. Oil prices continue to fluctuate around $60 per barrel, as they did before Venezuela.