In the early hours of Jan. 3 local time, the US launched an airstrike within Venezuela. US President Donald Trump later confirmed that the operation resulted in the capture of Venezuelan President Nicolás Maduro and his wife, who were subsequently taken out of the country. Maduro was removed from power over the weekend, fueling widespread expectations that Venezuela could move toward a government more aligned with Western interests.
In the immediate aftermath, Venezuela’s oil exports were temporarily disrupted and port infrastructure sustained damage, heightening short-term supply uncertainty and geopolitical risk. Oil prices reacted modestly, as markets assessed the disruption as manageable given Venezuela’s small contribution to global supply.
As of end-2025, Venezuela’s influence on global oil markets remains limited despite holding the world’s largest proven crude reserves. Years of sanctions and domestic economic deterioration have left production at roughly 1 million b/d—about 1% of global supply—with exports near 700,000 b/d, largely consisting of heavy crude primarily shipped to China.
“There’s clearly more geopolitical risk now,” said Simon Lack, portfolio manager of the Catalyst Energy Infrastructure Fund. “How the US will run Venezuela and what resources that will take is our first thought. There’s still very low but rising risk for US-backed regime change in Colombia or even Iran.”
In a research note, TD Cowen noted that while Venezuela is experiencing its most acute geopolitical crisis since the early 1900s, the immediate market impact is likely contained. The firm emphasized that ongoing global oversupply mitigates short-term supply risk premia, leaving markets focused instead on whether sanctioned barrels may re-enter global trade and on sentiment surrounding the possibility of a medium-term recovery in Venezuelan exports. TD Cowen also expects a muted “war effect” given the limited scope of the operation.
Potential changes for oil majors
From a corporate perspective, TD Cowen highlighted Chevron as best positioned to benefit from potential changes, given its existing footprint in Venezuela and its US Office of Foreign Assets Control license, which has allowed the company to produce and export crude from existing assets since fourth-quarter 2022.
Chevron currently produces about 200,000 b/d from Venezuelan joint ventures, which the company has indicated contributes roughly 2% of its total cash flow from operations (CFO).
ExxonMobil and ConocoPhillips also have historical exposure to the region. ConocoPhillips’ assets were appropriated in 2007 and recently had an $8.5 billion judgment against Venezuelan upheld. A change in regime could improve ConocoPhillips’ prospects for asset recovery or settlement. Further, future disputes around offshore Guyana oil that carry implications for ExxonMobil and Chevron are mitigated on the margin.
For US refiners, near-term effects are mixed. If Venezuelan crude currently flowing to China becomes available on the open market, it could widen crude quality differentials and reduce feedstock costs for refiners capable of processing heavier barrels. Conversely, any disruption to Venezuelan production or exports could reduce the roughly 150,000 b/d of Venezuelan crude currently reaching the US, raising the cost of lower-quality crude in the short term. Over the longer term, however, a sustained recovery in Venezuelan production would likely be positive for US refiners by increasing heavy crude availability and widening quality spreads.
Outlook
Looking ahead further into 2026, TD Cowen outlines a wide range of potential outcomes for global heavy oil markets. A rapid normalization scenario—defined by swift sanctions removal, a surge in US-led investment, and a meaningful ramp-up in Orinoco (dominant heavy oil region) production within 12–24 months—would introduce new heavy sour supply into the US Gulf Coast and directly compete with Canadian barrels. However, this outcome is assigned a probability of less than 5%.
More likely is a messy and prolonged transition marked by legal uncertainty, degraded infrastructure, labor shortages, and cautious capital deployment, with Venezuelan output recovering only gradually to roughly 1.2–1.5 million b/d over several years. This would suggest Canada's reliability as a key supplier remains a distinct competitive advantage.
