How US' military operation in Venezuela could impact oil supply chains

US forces have captured Venezuelan President Nicolás Maduro, an intervention that is raising urgent questions about its implications for oil production, prices, exports and global supply chains

The US has captured Venezuelan President Nicolás Maduro in what Washington described as a “large-scale military operation”, marking one of the most dramatic US interventions in Latin America in decades. US President Donald Trump said Maduro and his wife, Cilia Flores, were seized in Caracas and flown out of the country following coordinated military strikes.

 

Trump said the United States would oversee a temporary transition in Venezuela until a new political arrangement is put in place. The announcement has sent shockwaves through diplomatic and energy circles, given Venezuela’s position as one of the world’s most oil-rich nations.

 

What is the immediate impact on Venezuela’s oil sector?

 

 

Despite the scale of the military action, Venezuela’s core oil infrastructure has largely escaped physical damage. According to a Reuters report, production facilities and refineries operated by state-run PDVSA remain intact, with key oil assets not directly targeted.

 

However, oil exports have reportedly been sharply disrupted. Even before Maduro’s capture, US sanctions and enforcement actions had curtailed Venezuelan crude shipments. Recent seizures of oil cargoes and restrictions on tanker movements had already cut exports by about half from late-2024 levels, Reuters reported.

 

Following the operation, tanker loadings at major Venezuelan ports have largely stalled, with vessels diverting or leaving empty. Analysts cited by ABC News warn that if exports remain frozen, PDVSA could be forced to scale back production due to limited storage capacity. In the short term, the effective halt in Venezuelan oil flows has tightened supply, while uncertainty clouds the outlook for when exports might resume.

 

Why Venezuela’s vast reserves may not translate into quick gains

 

Venezuela holds the world’s largest proven oil reserves, accounting for nearly a fifth of the global total. Yet years of mismanagement, underinvestment and sanctions have left output far below historical levels.

 

The country once produced over 3 million barrels per day in the 1970s, roughly 7 per cent of world supply at that time. However, output fell below 2 million bpd in the 2010s and averaged around 1.1 million bpd last year, barely 1 per cent of global oil production.

 

US officials have said American energy companies could help rebuild Venezuela’s oil industry, with Trump promising large-scale investment to restore production and refining capacity. Trump has argued that revitalising Venezuela’s vast reserves will ultimately benefit both Venezuelans and global markets

 

Oil industry experts, however, caution that “there are no quick wins” in tapping Venezuela’s heavy crude. The quality of crude in the Orinoco Belt is extra-heavy and requires advanced upgrading. Chevron, currently the only major US oil company still operating in Venezuela, noted it remains “focused on the safety and wellbeing of our employees, as well as the integrity of our assets” in country, and will continue to comply with all relevant laws, The Guardian reported.

 

How have global oil markets reacted?

 

Global oil markets have reacted cautiously. Crude prices have shown limited movement, reflecting a balance between geopolitical risk and expectations of ample global supply.

 

While the disruption to Venezuelan exports is a short-term bullish factor, longer-term expectations of increased supply could weigh on prices. Oil prices have already been under pressure due to concerns about oversupply and slowing demand growth.

 

According to Reuters, traders are now assessing whether the Venezuelan upheaval will tighten or loosen oil balances. In the immediate term, the halt in Venezuela’s exports could introduce a bullish factor, especially if it triggers OPEC+ to adjust output. However, the broader sentiment is that extra supply will eventually hit the market once Venezuela is stabilised.

 

OPEC and its allies have signalled no immediate change in policy, reported Reuters. The producer group, of which Venezuela is a member, is expected to maintain its current output strategy, suggesting major exporters do not yet see the situation as a trigger for intervention.

 

What about sanctions and supply chains?

 

The US action raises complex questions around sanctions, ownership and control of Venezuelan oil. Washington has indicated it may oversee oil sales during the transition period, with revenues potentially directed towards public services and reconstruction.

 

Supply chains are also in flux. It is anticipated that US-aligned firms might take charge of lifting and marketing Venezuelan oil under a new legal framework. American Gulf Coast refiners, long geared for Venezuela’s heavy crude, could reportedly see a reliable supply return after years of scarcity, easing their feedstock costs.

 

For now, the impact on global oil markets remains limited but uncertain. Disrupted exports could tighten supply modestly in the near term, while any revival of Venezuela’s oil industry remains a long-term prospect rather than an immediate market shift.