U.S. seizes control over Venezuelan oil. What happens next?
The Trump administration has vowed to control Venezuelan oil for years to come, but reviving the sector will be difficult. Meanwhile, aggressive American foreign policy may backfire.
The U.S. abduction of Venezuelan President Nicolas Maduro and President Trump’s vow to run the Venezuelan oil industry for potentially years to come has ushered in a more turbulent era of petrostate politics.
What happens next is highly uncertain. The U.S. government intends to revive and rebuild oil production in the South American nation — to Washington’s benefit. But the strong-arm tactics could also force a rethink in capitals around the world about what it means to be dependent on the U.S. for energy.
The return of gunboat diplomacy and overt U.S. imperialism in the western hemisphere came as a surprise to many. European officials have not mounted much of a response. China’s condemnation was more forceful. But there is little anybody can do to stop the U.S. from intervening in Venezuela.
For now, the Trump administration has left the Chavista regime intact. Newly sworn in President Delcy Rodriguez, under tremendous pressure, may cooperate with the U.S. government and give the Trump administration immense influence over the country’s energy resources.
U.S. Secretary of Energy Chris Wright said the U.S. would control Venezuela’s oil sales “indefinitely.” The Wall Street Journal reported that the Trump administration has drawn up plans to dominate the Venezuelan oil industry for years to come.
At the same time, the U.S. blockade continues. On January 7th, the U.S. military seized a Russian oil tanker in the northern Atlantic Ocean, which the U.S. government accused of carrying Venezuelan oil. But if the U.S. wants oil to flow, next steps would need to include a rolling back of U.S. sanctions.
In the short-run, the overarching objective of the Trump administration is to invest in Venezuela’s oil sector, boost production, and, as Trump stated publicly, for him to control the proceeds personally. The Department of Energy quickly put out a fact sheet, claiming that its strategy would revive prosperity in the region.
The strategy appears to be to enlist U.S. private oil companies. The White House invited representatives of the oil majors and the top oil trading houses — Trafigura and Vitol — to a meeting on Friday. Reuters reported that Vitol has received a preliminary special license from the U.S. government to begin negotiations to import and export Venezuelan oil.
At the meeting, Trump pressed the industry titans to quickly enter Venezuela and start spending money to increase production. The oil majors were non-committal. ExxonMobil CEO Darren Woods called Venezuela “uninvestable” without overhauling the country’s hydrocarbons law, although he said he was confident the U.S. and Venezuelan governments could make that happen.
Truly turning the country’s oil industry around is easier said than done.
News reports are quick to note that Venezuela possesses the largest oil reserves in the world. But the oil is heavy, sour, and expensive to produce. More importantly, the infrastructure is in a catastrophic state, and reviving production will require tens of billions of dollars, perhaps up to $100 billion, over many years. It would also require a stable legal and political context, something that is completely absent at the moment.
However, even as some in the industry have sought to put a little distance between them and the U.S. government, there still appeared to be plenty of interest. Shell said it was “ready to go” if it obtains a license from the U.S., and that it has “a few billion dollars’ worth of opportunities to invest in.”
Chevron, the only U.S. oil company operating in the country today, said it could conceivably increase production by 50 percent within 18 to 24 months. The company’s cash flow could swell by $700 million annually, according to analysts.
Others have noted that U.S. industry executives expressing hesitation publicly could increase pressure on the U.S. government to sweeten the incentives. Executives said they will need strong legal and financial guarantees. Trump has even suggested offering reimbursements or subsidies.
One other angle is worth noting. In March 2025, the U.S. Secretary of State warned then-President Maduro not to invade or stage incursions into neighbouring Guyanese waters. Led by ExxonMobil, Guyana has become a significant and rapidly increasing source of offshore oil production. Rubio made clear that Venezuela’s efforts to seek control over offshore Guyana, and specifically ExxonMobil’s assets, was not something Washington would tolerate.
It did not make big news at the time, but as is clear now, toppling Maduro and seizing control of Venezuela has erased threats to U.S. control over Guyana.
Venezuelan gas? Not likely
Venezuela also sits on top of vast natural gas reserves, but production has been small and in decline for more than two decades. Most of its gas output is associated with oil production. A lack of gas infrastructure means that meaningfully boosting gas output is even more unlikely than for crude oil.
A question surrounds Venezuela’s relationship with Trinidad & Tobago. Trinidad began exporting LNG back in the late 1990s, but its domestic supply of gas has been dwindling, leading to curtailed output at its Atlantic LNG facility.
In 2023, the U.S. government granted Trinidad a license to import Venezuelan gas from the Dragon field, but the Trump administration revoked that in 2025. It is unclear if Washington will now change its position on the potential trade flow. Trinidad is keen to obtain access to Venezuelan gas to supply its LNG terminal and has cooperated to some degree with the U.S. government.
Another possibility could be Venezuela’s gas heading to Colombia. Colombia imports costly LNG, so an alternative supply from its neighbour would offer cost savings. However, as Bloomberg reports, a gas pipeline connecting the two countries would need to be fixed.
The environmental fallout is another problem. The dilapidated infrastructure means Venezuela’s oil and gas operations are incredibly dirty. In addition to extensive oil spills around Lake Maracaibo, methane emissions are off the charts. Gas is produced in association with oil, but Venezuela does not have the infrastructure to capture and transport the gas, so it is flared or vented. Around a quarter of the gas pulled out of the ground escapes into the atmosphere, a rate that is ten times higher than the global average.
Whether there is any improvement remains up in the air. At the January 9th meeting at the White House, the only oil company that made a firm commitment to enter Venezuela was Hilcorp, a company that has a history of emitting methane at rates far higher than the industry average.
Reactions to U.S. petropolitics
The broader ramifications of the U.S. seizure of Venezuela remain unclear. The leaders of Spain, Brazil, Chile, Colombia, Mexico and Uruguay issued a joint statement the day after the U.S. seized Maduro, condemning the action as a violation of international law. They also expressed concern over the attempt to control Venezuela’s natural resources.
Legal experts have said the military operation in Caracas and the abduction of Venezuelan President Nicolas Maduro is illegal under international law. And U.S. control over Venezuelan oil is also likely unlawful.
Trump has made clear that the international legal system will not constrain him. “I don’t need international law,” Trump said in an interview with the New York Times.
The U.S. has already sought to defang and undermine many multilateral institutions that work on climate change. In fact, just a few days after abducting Maduro, Trump withdrew from the UNFCCC along with 65 other international organisations.
The doubling down on Venezuelan oil and the overarching focus on fossil fuels could further slow the energy transition. Introducing new sources of supply could lower prices and incrementally increase demand. International climate efforts will further take a back seat. Washington is determined to force countries to buy its oil and gas.
Many in Latin America are now worried about what U.S. aggression might mean for them. In recent days, Trump made varying threats to Colombia, Mexico, Cuba, and Greenland.
The U.S. national security strategy released late last year calls for the return of the Monroe Doctrine, a 19th Century policy of keeping global powers out of the Western hemisphere so that Washington had free rein. The strategy says this will “restore American preeminence in the Western Hemisphere.”
But the rest of the world is not without agency. China is already leading many cleantech sectors, dominating the manufacturing and supply chains for solar panels, electric vehicles and batteries. China may now lose a source of oil imports in Venezuela, but that only underscores the risk of relying on the steady flow of fossil fuels. If the projection of American power sparks another strategy shift in Beijing, it could be to accelerate the transition away from fossil fuels.
Other countries could draw the same conclusion. Countries in Latin America may even deepen their ties to China.
If that occurs, then the Trump administration’s aggressive foreign policy could backfire, hastening rather than halting the global shift to clean energy.
(Writing by Nick Cunningham; editing by Sophie Davies)