Next Steps For Venezuelan Oil Industry
Note: this article is based on information available through January 7, 2026
The extensive planning that went into the raid and capture of former Venezuelan President Maduro led to a mission that apparently was both efficient and effective. While the next steps for Maduro will play out in US courts, the next steps for the Venezuelan government and the important oil sector appears much less certain.
President Trump has indicated that about 30-50 million barrels of Venezuelan oil will come under the control of US authorities, most likely the Department of Energy, which, at current prices, would amount to around $2.5 billion. The initial flow of that oil is expected to come from inventories that have built up within Venezuela as the US blockade tightened in recent weeks. That oil is primarily heavy, sour crude that is dense and has a high sulfur content, making it harder and more expensive to extract, transport, and refine into gasoline, requiring specialized equipment and processes. Conversely, the U.S. produces mainly light crude, which is easier to refine. However, older refineries were built for heavier, sourer oil, so it still needs heavier grades from other countries to meet diverse refining needs (note that the last major refinery built in the US was in 1977). As a result, there remains a solid demand for heavy, sour crude to create ample supplies of gasoline for the US market.
As a US agency sells the Venezuelan crude oil the proceeds will be deposited for safekeeping in major US banks in accounts controlled by the US Treasury. According to Press Secretary Leavitt “all proceeds from the sale of Venezuelan crude oil and products will first settle in US-controlled accounts at globally recognized banks to guarantee the legitimacy and integrity of the ultimate distribution of proceeds. Those funds will be dispersed for the benefit of the American people and the Venezuelan people at the discretion of the United States.” Venezuela’s state oil company, Petroleos de Venezuela SA, said in a statement that it is in negotiations with Washington over crude sales through a framework that would be similar to its arrangement with Chevron Corp., the only US major oil company still operating in Venezuela. The criteria for declaring a government stable and legitimate and what those oil sale proceeds will be used for when eventually distributed remains unknown at this time.
One potential use of the funds would to rebuild the infrastructure of the Venezuelan oil industry which has deteriorated over recent decades due to insufficient investment and alleged corruption that drained significant oil revenues from the broader economy. Restoring the industry to its former glories would be a huge undertaking, costing an estimated $10 billion per year over the next decade, according to estimates from Francisco Monaldi, director of Latin American energy policy at Rice University’s Baker Institute for Public Policy. In this context, it would still require major investment by US and global oil companies to re-establish a meaningful presence for the Venezuelan oil industry; despite holding an estimated 17% of global oil reserves, in recent years Venezuela has produced only about 1% of the world’s oil supply.
With most fast-moving global developments there are often unintended consequences. It appears one of the goals of the US Administration is to put further downward pressure on oil and gasoline prices, a benefit to US consumers and, presumably, a political benefit to the party in power entering the 2026 election cycle. However, there is such a thing as too much of a good thing. Given the decline of oil prices last year, the US Rig Count – a count of Rotary drilling activity in the US as compiled by Baker Hughes – has fallen from a post-pandemic high of 627 in late November 2022 to just 412 in early 2026, the lowest level of drilling activity since late 2021. A continued weakening of the domestic oil industry could have negative consequences in the years ahead as the US could become somewhat dependent on imported oil after achieving self-sufficiency over recent years.
