An oil refinery in Puerto Cabello, Venezuela. The country currently produces around 800,000 barrels of oil a day, about just 1% of global output. — AP
The US military’s ouster of Venezuelan President Nicolás Maduro is set to swiftly reroute the country’s oil exports back toward the United States – and away from China.
That will give US refiners an immediate boost, but President Donald Trump’s plans to revive production in the Latin American country may be slower to materialise.
Speaking last Saturday after announcing Maduro’s arrest on Truth Social, Trump said he would maintain the US embargo on exports of sanctioned Venezuelan crude oil for now, but also stated that the United States would run Venezuela “for a period of time”, suggesting US restrictions could be lifted very soon.
Benchmark oil prices had edged higher in recent weeks as Washington stepped up its military and economic pressure on Caracas, before Maduro’s capture.
But any new disruption to exports will likely have a limited impact on the global oil market, particularly since supplies are set to sharply exceed demand this year.
Venezuela, once a major producer, last year pumped only around 900,000 barrels per day (bpd), accounting for less than 1% of global supply. This followed years of shrinking investment due to failed government policies and sanctions.
It was unclear how Venezuela’s regime change will unfold, but a peaceful shift to a US-friendly regime would almost certainly lead to the repeal of Washington’s sanctions.
This will offer Venezuela’s creaking oil sector a much-needed reprieve and, perhaps more importantly, redraw the global refining map.
A smooth transition in Caracas will likely result in a rapid rerouting of Venezuelan oil exports, re-establishing the United States as the major buyer of the country’s volumes.
Oil refineries along the US Gulf Coast, the country’s main refining and exporting hub, were built decades ago to process heavy-grade crude – the type Venezuela exports – for products such as petrol, diesel and jet fuel.
Although the US crude oil mix dramatically changed following the boom in domestic shale oil – a light grade – in the early 2010s, many refineries still require heavy grades to optimise operations.
Venezuelan crude exports to the United States reached a peak of 1.4 million bpd in 1997, when they accounted for 44% of Venezuela’s production, according to the Energy Information Administration.
Venezuelan exports collapsed to zero between 2020 and 2022 after Trump imposed direct oil sanctions on the state-owned energy company PDVSA. But they then recovered to 227,000 bpd in 2024 and 140,000 bpd in the first 10 months of last year after Washington in 2020 issued Chevron a waiver to continue operating its joint ventures in Venezuela.
A shift in Venezuela’s exports would come largely at the expense of China, which became the main importer of Venezuelan oil after Trump imposed sanctions on the country’s energy industry in 2019.
China accounted for more than half of Venezuela’s crude exports of 768,000 bpd last year, according to data from analytics firm Kpler.
Trump suggested last Saturday that China will continue to receive some Venezuelan oil under a US-led government in Caracas, but that amount is likely to be limited. — Reuters
Ron Bousso is a columnist for Reuters. The views expressed here are the writer’s own.
