While the U.S. action is unlikely to have an immediate impact on crude prices given the current oversupply in the market, it could upend energy markets and have implications for the geopolitical landscape.
The shale oil revolution has made the United States the world’s largest crude oil producer. The large amount of oil recently discovered off the coast of Guyana was mainly made up of Exxon Mobil and Chevron. U.S. control of Venezuela’s energy industry, which has the world’s largest oil reserves, could “reshape the balance of power in international energy markets,” JPMorgan analysts wrote on Monday.
“If these figures were combined for U.S. influence, the U.S. would become the dominant holder of global oil reserves, potentially accounting for around 30% of global oil reserves,” J.P. Morgan wrote. “This would mark a significant shift in global energy dynamics.”
Venezuela’s oil industry has fallen into disrepair due to years of neglect and international sanctions. However, some oil industry analysts It is believed that Venezuela can double or triple its current production of about 1.1 million barrels of oil per day and return the country to historical production levels relatively quickly.
“With greater access to and influence over a large portion of the world’s reserves, the United States is likely to exert more control over oil market trends, helping to stabilize prices and keep them within historically low ranges,” JPMorgan said. “Increased leverage could not only enhance U.S. energy security but also reshape the balance of power in international energy markets.”
However, whether or when this happens is more complicated. Many energy analysts believe the road ahead is longer and more difficult.
“While the Trump administration has suggested that major U.S. oil companies will move into Venezuela and spend billions of dollars repairing infrastructure, we believe political and other risks and current relatively low oil prices may prevent this from happening anytime soon,” William Blair’s Neil Dingman writes. Significant changes in Venezuelan production will require significant time and millions of dollars in infrastructure improvements, he said.
Any current investment in Venezuelan infrastructure would be made amid weak global energy markets. U.S. crude oil prices fell 20% from last year. The price of a barrel of U.S. benchmark crude has not been above $70 a barrel since June, nor has it hit $80 a barrel since the summer of 2024.
Before the U.S. housing crisis broke out in 2008, the price of a barrel of oil exceeded $130.
John Freeman of Raymond James writes that several factors could affect production in Venezuela, including the speed of the government transition and the speed and willingness of multinational oil companies to re-enter the country.
Shares in the energy sector were generally higher at the open, especially for companies with large refining operations.
Venezuela produces heavy crude oil needed for diesel, asphalt and other fuels for heavy equipment. There is a global diesel supply shortage due to oil sanctions from Venezuela and Russia and the inability of U.S. light crude oil to easily replace diesel.
Large refineries like Valero, Marathon Oil Company and Phillips 66 It opened up 5% to 6%.
Oilfield services companies, those that actually go into oil fields to drill and maintain wells, saw even bigger gains. SLB and halliburton The increase is between 7% and 8%.
Shares of major oil exploration companies such as Exxon Mobil, Chevron and ConocoPhillips rose between 2% and 4%.