PETALING JAYA: While the military intervention of the United States in Venezuela is unlikely to disrupt global oil supply, experts believe it is highly likely that this would introduce short-term volatility to oil prices due to political factors.
This follows the entrance of the US military into Venezuela on Jan 3, which conducted airstrikes on multiple targets across the north of the country, and captured President Nicolás Maduro along with his wife Cilia Flores.
Maduro was subsequently flown out of the country and transferred to US custody in New York to face charges related to narcoterrorism and drug trafficking.
WTI crude price at the time of writing was hovering at around US$56.70 per barrel while Brent crude was moving around US$59.80, with Goldman Sachs reportedly forecasting Brent and WTI crude to decline further to 2026 averages of US$56 per barrel and US$52 per barrel, respectively.
Despite the oil-related and law enforcement narratives that are heavily being sold, many observers believe this latest US operation represents far more than meets the eye, although they continue to debate the necessity of such an overt action, especially as geopolitical alliance issues linger in the background.
Economist Geoffrey Williams believes that there should be no disruption to global oil supply because the Venezuelan oil industry is still intact.
“There may be an effect on oil prices due first to a boost in confidence that the Venezuelan issues are being addressed and also if Venezuelan oil is fully priced in dollars from now on, instead of other currencies as had been the practice under Maduro,” he told StarBiz.
For the long term, while acknowledging that Venezuelan oil capacity should improve and add to global supply under US companies, he said lessons from Iraq suggest that may take about a decade to achieve.
“Nonetheless, it pushes viable oil capacity out over a long-term horizon. This cuts price expectations and reduces the need for alternative energy.
“Sanctions on Venezuelan shipping should end now and investment into Venezuela, especially in the oil and gas sector has a better outlook,” said Williams, before noting that Venezuelan oil is heavy crude used for tar, asphalt and petrochemicals, which requires much processing that the United States can provide.
He added: “This will not be quick but it will have a significant long-term positive impact on Venezuela, the United States and global supply in terms of quantity, quality and stability.”
Globally, Williams opined that there should not be significant changes in the short term, while holding the view that oil prices could fall.
Investment strategist and economist at IPP Global Wealth Mohd Sedek Jantan concurred with Williams that from a physical supply standpoint, Venezuela is no longer systemically important to the global oil balance.
He pointed out that Venezuela produced about 921,000 barrels per day in 2024 and exported roughly 656,000 barrels per day, equivalent to just 0.6% of global oil demand and around 3% of total Organisation of Petroleum Exporting Countries or Opec crude exports.
“This means that even a complete disruption of Venezuelan exports would be smaller than a typical unplanned outage in Libya or Nigeria, and far smaller than the supply adjustments Opec and its allies or Opec+ already manages,” said Mohd Sedek.
More crucially, however, he said Venezuela’s relevance is not in volume but in geopolitical signalling, because despite its low production, the South American nation holds the largest proven oil reserves in Opec, yet produces less than a million barrels a day due to years of sanctions, under-investment and operational decay.
When the United States escalates pressure on such a sanctioned producer, Mohd Sedek believes that markets will read this not as a local supply issue, but as a broader signal that geopolitical risk across the energy system is rising.
“This is the same dynamic that drove oil prices higher during the US re-imposition of Iran sanctions in 2018 and after Russia’s invasion of Ukraine in 2022; expectations and risk hedging moved prices well before physical supply was lost,” he said.
Looking into the broader context, Mohd Sedek commented that events in Venezuela are not simply a regional security episode but are part of a broader structural shift in how energy is being integrated into geopolitics and globalisation.
The economist is of the view that the United States is no longer treating oil as a neutral, globally traded commodity governed primarily by price and logistics.
Instead, it is increasingly being governed through political alignment, sanctions architecture and security enforcement.
“The US has made clear, through both sanctions and naval enforcement actions, that access to energy markets is now conditional on political alignment.
“Venezuela sits directly at the intersection of this new framework. Although it only exports about 656,000 barrels per day, the US decision to interdict tankers and frame Caracas as a narco-terrorist state effectively signals that energy flows from politically misaligned states can be removed from global markets not just through financial sanctions but through hard power and maritime enforcement,” said Mohd Sedek.
He said the United States is effectively asking countries to trade energy, technology and capital within politically aligned blocs; reduce dependence on adversarial or sanction-exposed suppliers; and accept higher costs in exchange for geopolitical reliability.
Mohd Sedek added that as such, oil is becoming a friend-shored strategic commodity, and in such a system, producers with geopolitical alignment and spare capacity will rationally tolerate higher prices and higher volatility rather than neutralise them.
“That is why the probability of a sustained geopolitical risk premium in oil is rising, not falling,” he noted.
Meanwhile, economist and associate professor Mohd Harridon Mohamed Suffian at Universiti Kuala Lumpur Business School, although agreeing with Williams and Mohd Sedek on the supply factor, cautions that vigilance should be applied in the long run, since Venezuela still holds a significant amount of oil reserves, and this reserve could be periodically tapped in an effective way through astute technological investments.
While conceding that minor economic ripples could result due to the conflict in Venezuela, these would be mitigated by the concurrent oversupply of crude oil in the global market, underpinned by the fact that most countries are not highly dependent on Venezuelan crude oil.
“However, with China being the primary player in this situation, it would be interesting to observe the economic counter-measures from China in terms of acquiring other sources of crude oil.
“Within this context, there could be a fluctuation in market sentiment and price, but the breadth and magnitude of this fluctuation depend upon the effectiveness of the economic responses from China,” Mohd Harridon said.
Of keen interest, another analyst who spoke to StarBiz on the condition of anonymity, argued that the military operation in Venezuela by Washington was not primarily driven by oil or narcotics concerns, but by Pentagon threat assessments centred on critical minerals and the combined presence of China, Iran and Russia.
The analyst said major US military actions are effectively initiated by the Pentagon based on strategic necessity, with the president providing authorisation and political justification rather than directing the decision itself.
Echoing what other experts have observed, she said Venezuelan oil no longer holds the strategic importance it once might have, before noting that if oil were the main objective, the operation would have occurred earlier, during periods of higher output and greater international support for regime change.
“Instead, the timing aligns with rising Pentagon concern over critical mineral supply chains, particularly following China’s 2025 restrictions on rare earth exports,” said the analyst.
The central strategic concern is Venezuela’s role as a convergence point for America’s three political adversaries, observed the analyst, with China being said to have embedded operational control at Venezuelan mining sites in the Orinoco Mining Arc, securing access to critical minerals such as coltan, cobalt and rare earth elements that are essential for modern weapons systems.
“Iran’s Islamic Revolutionary Guard Corps is described as having established a permanent military-industrial presence in Venezuela, while Russia’s involvement includes military advisers, air defense systems, radar installations and training programmes that integrate Venezuelan forces with Russian doctrine and technology.
“This creates a contested electromagnetic and air defense environment close to US territory,” she said.
The analyst concluded that Venezuela has become strategically intolerable because it hosted simultaneous, mutually reinforcing operations by China, Iran and Russia, pointing out that the Pentagon’s likely objective is to dismantle this combined adversary presence, secure access to critical minerals outside Chinese control, and eliminate hostile military capabilities in the Western Hemisphere.
“Oil, in this framing, serves primarily as a simplified, easily understandable public narrative rather than the true strategic rationale,” she said.
According to news agency AP, interim Venezuela president Delcy Rodríguez has taken the place of Maduro, and has offered “to collaborate” with the Trump administration in what could be a seismic shift in relations between the adversary governments.
Rodríguez served as Maduro’s vice-president since 2018, overseeing much of Venezuela’s oil-dependent economy and its intelligence service, and was next in the presidential line of succession.
