US President Donald Trump’s idea of taking control of Venezuela’s oil industry and inviting US companies to rebuild it after the capture of President Nicolás Maduro is unlikely to move global oil prices in the near term, analysts say.As per news agency AP, Venezuela’s oil sector has been hollowed out by years of neglect, mismanagement and sanctions, meaning any meaningful jump in production would take time and heavy investment.
Although some damage from recent US military action appears limited, analysts caution that the country’s oil infrastructure has been deteriorating for years. “It has been decaying for many many years and will take time to rebuild,” Patrick De Haan, lead petroleum analyst at GasBuddy, as per AP. Current output stands at about 1.1 million barrels per day, far below historical levels, though some experts believe production could eventually double or even triple if conditions improve.A key hurdle is political stability. American oil companies are unlikely to commit billions of dollars unless there is clarity on who governs Venezuela and whether contracts will be honoured. Uncertainty remains after Trump claimed the United States is now in charge, while Venezuela’s vice president had argued Maduro should be restored to power before the country’s top court named her interim leader.If the US manages to establish control quickly, optimism could rise. Phil Flynn, senior market analyst at Price Futures Group, said that if Washington appears to be running the country even for a short period, US energy firms may be encouraged to step in and revive production, according to AP.Over time, a stronger Venezuelan oil sector could help keep global prices lower and increase pressure on Russia, he added.Oil markets were closed over the weekend, and analysts do not expect sharp price moves when trading resumes. Venezuela’s production is already factored into OPEC output, and the global market is currently well supplied, limiting the immediate impact.Venezuela holds the world’s largest proven crude reserves, estimated at about 303 billion barrels, roughly 17 per cent of global reserves, according to US energy data cited by AP. That scale explains why international oil companies remain interested. Chevron is currently the only US firm with significant operations in the country, producing around 250,000 barrels a day through joint ventures with state-owned PDVSA. ExxonMobil and ConocoPhillips exited Venezuela in 2007 after then president Hugo Chávez nationalised much of the sector.Chevron said it remains focused on employee safety and compliance with laws, while ConocoPhillips said it is monitoring developments but would not speculate on future investments, AP reported.Experts stress that the challenge is less about finding oil and more about trust and stability. “How do you get foreign companies to start pouring money in before they have a clear perspective on the political stability, the contract situation and the like,” asked Francisco Monaldi of Rice University.Even with massive reserves, Venezuela produces less than 1 per cent of global supply. Corruption, sanctions and underinvestment saw output slide from 3.5 million barrels a day in 1999 to current levels. Reaching four million barrels a day could take around a decade and require about $100 billion in investment, Monaldi said.Venezuela’s heavy crude is particularly valuable for producing diesel and asphalt, fuels that are in tight supply globally.As per news agency AFP, US refineries along the Gulf Coast are well-suited to process this type of oil, making access to Venezuelan crude attractive.
