Venezuela Could Take Years to Boost Oil Output Significantly

U.S. military forces captured Venezuelan President Nicolás Maduro on January 3, 2026, marking a significant turning point in the country’s political and economic future. The operation, conducted by special forces including the Army’s Delta Force, involved over 150 aircraft and resulted in the detention of Maduro and his family. The move followed months of escalating sanctions, cyberattacks, and maritime blockades aimed at Venezuela’s oil sector according to reports.

With Maduro now in U.S. custody, the Trump administration has announced plans to oversee a political transition in Venezuela. The administration stated that American oil companies would play a role in rebuilding the country’s oil infrastructure, though analysts caution that any meaningful output recovery will take years as analysts warn.

Goldman Sachs analysts have downplayed expectations of a swift rebound in Venezuela’s oil production. The firm noted that years of underinvestment and deteriorating infrastructure have left the country’s oil sector in a weakened state. Significant gains would require large-scale capital inflows and supportive policy incentives.

Why Did This Happen?

The U.S. has intensified its pressure campaign against Venezuela’s oil sector since 2020, when the Department of Justice indicted Maduro on drug-trafficking charges. Sanctions have been imposed on key oil companies and tankers, while military actions have included strikes on suspected drug-smuggling boats and the seizure of oil exports. The recent military operation represents a direct escalation of this strategy, aimed at securing U.S. economic interests.

The Trump administration has framed its actions as a necessary response to Venezuela’s alleged use of oil profits to fund illicit activities, including drug trafficking. Treasury Secretary Scott Bessent stated that the U.S. would not allow the Maduro regime to profit from oil while contributing to the drug crisis in the U.S. as Treasury Secretary Bessent stated.

How Did Markets Respond?

Oil prices showed little immediate response to the U.S. operation, as global markets remain focused on broader supply dynamics. Brent crude futures opened 2026 near $61 a barrel, while WTI settled around $57. Analysts attributed the muted reaction to the fact that Venezuela’s current output—estimated at 930,000 barrels per day—is a small fraction of global demand.

Goldman Sachs left its 2026 oil price outlook unchanged, predicting an average of $56 for Brent crude and $52 for WTI. While the firm acknowledged the possibility of longer-term downward pressure on prices, it emphasized that near-term risks remain balanced by OPEC+ production decisions and global demand trends as the firm noted.

What Are Analysts Watching Next?

Venezuela’s state oil company PDVSA has begun cutting production as storage capacity nears saturation due to U.S. export restrictions. The company has asked joint ventures to reduce output or shut down wells to prevent overfilling of storage facilities. Analysts warned that prolonged production cuts could disrupt refining operations and domestic fuel supply.

Rebuilding Venezuela’s oil infrastructure will require substantial investment, according to industry reports. PDVSA is still recovering from a cyberattack in December that further strained logistics and port operations. The company’s ability to attract foreign investors will depend heavily on the stability of the new interim government and the clarity of U.S. sanctions policy.

Goldman Sachs estimated that a scenario where Venezuela’s output rises to 2 million barrels per day by 2030 could result in a $4 per barrel downside to oil prices. The firm emphasized that any recovery in production would likely be gradual and contingent on large-scale upstream investment as the firm noted.

As the U.S. prepares to assume control of Venezuela’s oil sector, market participants are closely monitoring how Washington will manage the transition. While Trump has expressed a desire to rebuild the country’s infrastructure, he has not outlined a timeline for U.S. involvement or the criteria for transferring control to a new administration as the administration has stated.

The global oil market remains oversupplied, with OPEC+ set to meet on January 4 to discuss its production strategy. Traders expect the group to maintain its current output cap through the first quarter, limiting the potential for price spikes despite geopolitical volatility as traders expect.

Venezuela’s oil reserves remain a key long-term asset for global investors, but analysts agree that meaningful production increases will take years to materialize. For now, the focus remains on short-term supply dynamics and the balance between OPEC+ decisions, demand trends, and geopolitical developments as analysts agree.