Jan 9, 2026, 6:15 AM ETInterview

Why Trump’s Venezuela oil gamble won’t pay off

Venezuela's oil reserves are currently characterized as heavy, dirty, and difficult to extract, requiring expensive processing that yields a lower-grade product with reduced market value per barrel.
Production cannot realistically return to its historical peak of over 3 million barrels per day without more than $100 billion in capital investment and a decade-long commitment from major oil companies.
Even if production increases, the current "nadir" of approximately 1 million barrels per day is unlikely to be sustained or significantly improved in the short term.
Investment feasibility is critically dependent on the global oil price, which analysts suggest must remain sustained at $80 per barrel or higher to justify the 10-to-20-year return horizons required for extraction.
Current market forecasts predicting prices could fall to $50 per barrel create an environment where investors are unwilling to commit capital to Venezuelan expansion.
The Orinoco Belt's heavy crude requires specialized refinery configurations; while these facilities exist on the U.S. Gulf Coast, the oil is more carbon and emissions-intensive than lighter domestic crude.

The sector has suffered two distinct waves of government expropriation: an initial nationalization in the 1970s which was largely amicable and compensated (e.g., Exxon's early withdrawal), and a hostile expropriation wave in the mid-2000s under Hugo Chavez.
Under the hostile 2000s intervention, companies like Exxon, Conoco, and ConocoPhilips faced asset seizures they litigated aggressively, while Chevron chose to "play ball" and retained operations.
Chevron remains in a unique position, with roughly one-third of its current oil output sourced from Venezuela, operating under special dispensation granted by both the Biden and Trump administrations despite the regime's status.
Political, regulatory, and legal risks remain above ground, compounded by a history of government intervention that has made major international oil companies wary of further involvement.

The premise of securing Venezuelan oil for U.S. purposes is framed as a "brazen heist" or short-term win, contrasting with the current reality that the U.S. is a net energy exporter rather than a resource-scarce importer.
U.S. strategic thinking regarding energy has shifted from the mid-2000s fear of global depletion to a current state of oil glut, rendering the pursuit of Venezuelan reserves less urgent and more "old school" in nature.
U.S. Gulf Coast refineries, historically optimized for heavy Venezuelan crude, would see immediate short-term benefits if the oil were reintroduced, serving as a windfall for those specific domestic entities.
Trump's approach is criticized for failing to update its economic views to reflect the current reality of U.S. energy abundance, paralleling his "80s-era" protectionist views on tariffs.
Policies aimed at foreign extraction do not generate U.S. jobs or profits for smaller American exploration companies, potentially alienating a key political constituency within the energy sector.

Analysts predict that "Big Oil" will regret supporting Trump, noting that the renewable energy sector (wind and solar) expanded more during Trump's first term than in all of American history prior to 2017.
Continued decarbonization and the rise of clean energy are expected to persist regardless of political leadership, with the Venezuelan venture potentially representing a "last gasp" of a dying traditional industry.
There is a divergence between administration preferences for immediate headline-generating wins and the industry's need for decades of property rights protection and long-term certainty.
The U.S. shale boom, producing lighter crude, has further reduced the strategic necessity of importing heavy foreign crude, even if refineries are technically capable of processing it.