Trump's Venezuela Gambit Tests Investor Appetite for Geopolitical Risk

U.S. President Donald Trump announced that American oil companies will invest billions of dollars to revive Venezuela's oil industry after capturing President Nicolás Maduro. This move aims to leverage Venezuela's vast oil reserves, which hold the world's largest proven crude oil reserves at approximately 303 billion barrels. Trump emphasized that the United States would oversee Venezuela during a transitional period while ensuring the country's oil infrastructure is repaired according to reports.

The plan outlines a long-term strategy for U.S. energy firms to enter Venezuela and begin large-scale production. However, analysts have highlighted the significant challenges and timelines involved. It will likely take decades and tens of billions of dollars to restore the country's oil output to historical levels due to underinvestment and mismanagement over the years.

Chevron remains the only active U.S. oil company in Venezuela, operating under a license granted by Joe Biden in 2022. The company currently accounts for about 20% of Venezuela's oil production and has emphasized its focus on employee safety and regulatory compliance. Other major oil firms have been silent on the issue, with internal discussions ongoing regarding whether to pursue opportunities in the region according to reports.

Why Is This Plan Controversial and Uncertain?

Venezuela's political landscape remains unstable, with conflicting claims about who controls the government. Trump stated the U.S. will run Venezuela pending a leadership transition, while Venezuela's interim leadership insists Maduro should be reinstated according to reports. This uncertainty discourages major investments from foreign firms, as political stability is a key factor for long-term commitments according to analysts.

The oil infrastructure has been in decline for years, and despite reports that it was unharmed by U.S. military actions, it will take significant time and funding to bring it up to modern production levels. Analysts warn that even if output returns to 3 million barrels per day, Venezuela would still rank outside the world's top 10 oil producers according to data.

How Do Analysts View the Market Implications?

Market analysts suggest that Trump's plan may not significantly impact global oil prices in 2026. The world is currently not facing a shortage of oil, with high production levels among OPEC+ countries. Therefore, even with increased Venezuelan output, the global supply would likely remain stable according to reports.

Oil prices closed 2025 at their steepest annual decline since 2020, with WTI crude near $57.90. However, experts note that any meaningful price changes would require a long-term shift in global supply dynamics, which is unlikely to occur in the short term according to data.

What Are the Geopolitical Reactions and Regional Concerns?

Latin American leaders are divided in their responses to the U.S. intervention. Right-wing governments have largely supported the move, while left-wing leaders condemned it as an aggression against Venezuela's sovereignty according to reports. Colombia's President Gustavo Petro called for a meeting of the U.N. Security Council and expressed strong opposition to the U.S. action according to reports.

China, a major oil importer from Venezuela, has also reacted. The country's foreign ministry demanded the U.S. release Maduro, citing international law violations. However, Trump stated that oil exports to China will continue according to reports.

What Are Analysts Monitoring for Future Outcomes?

Analysts are watching for clarity on the political situation in Venezuela and the willingness of U.S. oil firms to invest. The ability to restore oil production will depend on stable governance and long-term commitments from foreign firms.

Additionally, the U.S. is considering military actions in other Latin American countries, including Colombia and Mexico, if they fail to curb drug trafficking to the U.S. According to reports, this further complicates the geopolitical landscape in the region.

What Could Be the Long-Term Impact on Global Oil Markets?

If the U.S. can successfully stabilize Venezuela and attract major energy firms to invest, the country could become a significant oil producer again. This could increase global oil supply and potentially lower prices over time. However, analysts note that global oil markets are currently oversupplied, so any new production would need to be carefully balanced to avoid further price declines according to reports.

Investors are closely monitoring whether U.S. energy companies will enter the market and how the political situation will evolve. For now, the focus remains on stability and the long-term viability of the investment according to analysts.