After overseeing the seizure of Venezuelan President Nicolás Maduro last month, U.S. President Donald Trump has signalled plans to visit the South American country, though no date has been set. His comments came shortly after U.S. Energy Secretary Chris Wright completed a two-day trip to Venezuela to examine the reopening of the nation’s oil sector to foreign and private investment.
Venezuela’s National Assembly recently passed a law allowing foreign companies to invest in the oil industry, ending nearly two decades of strict state control. Trump described the opportunity as historic, saying, “We’re going to be extracting numbers in terms of oil like few people have seen,” following a meeting with U.S. energy executives at the White House.
Economists see potential benefits for the United States. William Jackson, chief emerging markets economist at Capital Economics, said the plan could “revive Venezuela’s oil sector and use that energy to increase supply and reduce costs to the consumer, possibly providing a source of revenue for a more friendly Venezuelan government to rebuild the economy after years of mismanagement.”
Yet analysts warn that Venezuela’s oil industry faces massive obstacles. The state-owned PDVSA company is a shadow of its former self, damaged by years of underinvestment while funding social programmes under Hugo Chávez and Nicolás Maduro. Oil production has declined sharply, equipment is deteriorated, and many skilled engineers have left the country. Jackson noted that production today is roughly 1.5 million barrels a day below levels a decade ago.
Monica de Bolle, senior fellow at the Peterson Institute for International Economics, said PDVSA would need to be “scrapped completely and rebuilt from the ground up” if political constraints were not an issue. She added that the company remains a powerful symbol of sovereignty, making it unlikely Venezuelans would fully comply with U.S. demands.
Trump has urged U.S. firms to invest at least $100 billion to restore infrastructure, a necessary step before increasing oil exports. Venezuela officially holds 300 billion barrels of reserves, but last year exported just 211.6 million barrels, worth $4 billion, far below Saudi Arabia’s $181 billion in exports from slightly smaller reserves. Questions remain over the true size of Venezuela’s reserves, with past statistics inflated during the Chávez era.
The quality of Venezuelan oil also poses challenges. Its heavy, sour crude is harder to refine and highly corrosive to pipelines. Analysts say a production surge could have minor impacts on Canadian oil markets, though Capital Economics predicts Canadian output will remain competitive.
U.S. energy companies are cautious. Previous expropriations, unpaid court awards, and the presence of armed paramilitary groups complicate investment. Trump has offered no guarantees or incentives, instead warning firms against inaction. De Bolle described the strategy as “all stick, no carrot,” highlighting the risk that firms may be reluctant to commit without stronger assurances.
For now, the potential for Venezuela’s oil riches remains tied to complex political, technical, and financial hurdles, leaving the path to a U.S.-led production revival uncertain.
