Venezuela, Home to World’s Biggest Oil Reserves, in Focus After US Strike

In a matter of hours, Venezuela has become the focal point of global energy markets. A sweeping U.S. strike on Caracas and the arrest of President Nicolás Maduro, who was transferred out of the country, have not only created a political vacuum but also revived long-standing questions about the fate of the world’s largest proven oil reserves and their impact on oil and gas prices.

The developments have intensified uncertainty around a country that holds vast energy wealth but has struggled for years to convert it into stable production. For markets, the key question is whether geopolitics will finally unlock Venezuela’s oil potential or plunge it deeper into chaos.

Venezuela possesses an estimated 303 billion barrels of crude oil, nearly one fifth of the world’s proven reserves, according to the U.S. Energy Information Administration. That figure exceeds the reserves of Iraq and far surpasses those of many major producers. Yet this enormous endowment does not translate into immediate supply power.

So far, markets have reacted cautiously. Oil futures do not trade over the weekend, leaving any immediate price response dependent on developments in the coming days. Even in a worst-case scenario where Venezuelan supplies were fully disrupted, analysts say prices would not spiral quickly.

The reason is simple. Venezuela currently produces around one million barrels per day, less than one percent of global output. Compared with major producers such as the United States or Saudi Arabia, its short-term influence on supply is limited.

Washington announced the end of its operation after detaining Maduro, but the political picture remains unclear. If Vice President Delcy Rodríguez were to assume power, markets may see little immediate change, given her deep ties to the socialist system that has ruled Venezuela since 1999.

The United States, however, has signaled it does not want continuity under figures aligned with Maduro’s policies. Washington recognizes exiled opposition leader Edmundo González as the legitimate president, with backing from opposition figure María Corina Machado, who was awarded the 2025 Nobel Peace Prize.

The coming hours and days are critical. Support from the military for a transition could be interpreted by markets as a stabilizing signal. A descent into internal conflict or civil war, by contrast, would sharply raise risk premiums and darken the outlook for energy investment.

Despite holding the largest confirmed oil reserves on the planet, Venezuela illustrates the gap between potential and reality. Current production is less than half of what it was when Maduro took office in 2013 and less than a third of the 3.5 million barrels per day produced before the socialist system consolidated control.

International sanctions, economic collapse, and mismanagement have all played a role. But the deeper issue has been chronic underinvestment and lack of maintenance, leaving oil fields, pipelines, and refineries in a state of long-term decay.

Politically, the event is dramatic. From a pricing perspective, its short-term impact appears muted. Oil markets are already grappling with concerns about oversupply, as OPEC output rises and global demand slows under the weight of inflation and high living costs.

U.S. crude briefly climbed above 60 dollars per barrel when Washington began seizing Venezuelan shipments, but prices later slipped back toward 57 dollars. Gas markets have shown a similar pattern, reflecting caution rather than panic.

Venezuelan oil is not easy oil. It is heavy and high in sulfur, requiring advanced technology and large-scale investment to extract and refine. International oil companies have those capabilities, but sanctions and political hostility have kept them largely sidelined.

The paradox is that the United States, the world’s largest oil producer, mainly pumps light crude suited for gasoline, while it needs heavy crude to produce diesel, asphalt, and fuel for heavy industry. With global diesel supplies tight, Venezuela represents a missing piece in the energy puzzle.

Many U.S. refineries were originally designed to process Venezuelan crude and operate more efficiently when using it than when relying solely on domestic oil.

If a political transition unfolds smoothly and international companies are allowed to return to rebuild Venezuela’s oil sector, the U.S. strike could mark a turning point rather than just a military episode. Over time, Venezuela could re-emerge as a significant force in global energy markets.

Until then, the impact remains more psychological than physical. The reserves are there, the potential is vast, but the distance between politics and the barrel is still long.