The Crude Reality of Venezuelan Oil

Despite the U.S. government’s proclamations, Venezuela’s oil sector remains deeply impaired, limiting its ability to influence global crude markets in the near term. Current output hovers around 1 million barrels per day (mb/d)—barely 1% of global supply—despite the country holding the world’s largest proven reserves.

Analysts caution against expectations of a rapid rebound. Significant production growth will require sustained higher prices, billions in capital investment, and long-term political stability—conditions far from guaranteed.

Venezuela’s crude is predominantly heavy and sour, meaning high viscosity and elevated sulfur content. Processing these barrels demands specialized handling, blending with lighter hydrocarbons, and complex refining—capabilities concentrated in U.S. Gulf Coast refineries. These facilities can convert Venezuelan crude into diesel, asphalt, and other products, but global alternatives remain limited.

Today, Venezuela claims 303 billion barrels of reserves, yet produces only a fraction of that potential. Rystad Energy estimates $53 billion is needed over 15 years just to sustain current output, with $130 billion or more required to approach historical peaks (3.5 mb/d in the 1970s)—much of it for rehabilitating aging fields and infrastructure.

With oil prices forecast to average below $60 per barrel in 2026, incentives for large-scale Venezuelan projects remain muted. Global supply dynamics reinforce this: Venezuela’s volumes are too small to materially shift balances, and refiners have substituted lost barrels with imports from Canada, Mexico and the Middle East.

While Venezuela’s crude is a rounding error in global supply, its heavy grades matter for diesel and jet fuel markets, where tightness persists. Any shift in U.S. buying patterns could force China, currently the dominant buyer, to seek alternative sources.