Venezuelan Regime Change May Open Oil's Floodgates
- Venezuela's oil production is near its lowest in a century and American actions against the administration of President Nicolás Maduro are unlikely to have much impact on oil prices.
- A regime change in Venezuela could reopen the country to foreign companies and boost crude output, potentially turning Venezuela into a large source of incremental petroleum supply.
- The arrival of a pro-Western and pro-business government in Venezuela could end the oil market's bull run by providing a new source of crude supply and eliminating one of the market's few remaining positive narratives.
November 5, 2025 at 7:30 AM GMT+3
By Javier Blas
Javier Blas is a Bloomberg Opinion columnist covering energy and commodities. He is coauthor of “The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources.”
Takeaways by Bloomberg
- Venezuela's oil production is near its lowest in a century and American actions against the administration of President Nicolás Maduro are unlikely to have much impact on oil prices.
- A regime change in Venezuela could reopen the country to foreign companies and boost crude output, potentially turning Venezuela into a large source of incremental petroleum supply.
- The arrival of a pro-Western and pro-business government in Venezuela could end the oil market's bull run by providing a new source of crude supply and eliminating one of the market's few remaining positive narratives.
Despite sitting atop the world’s largest oil reserves, it’s a sad truth that Venezuela doesn’t matter for the energy markets. With production languishing near its lowest in a century, American saber-rattling against the administration of President Nicolás Maduro isn’t having much impact on oil; even an actual confrontation looks likely to only push prices a bit higher.
The opposite may even be true. It's a long shot, but a brief military campaign — perhaps echoing the US invasions of Grenada and Panama in 1983 and 1989 that triggered the collapse of the regime in Caracas — could go from bullish to bearish for the oil market rather quickly.
Regime change, ending a 25-year mix of socialism and repression, could reopen Venezuela to foreign companies, an essential step to boosting crude output. The geology is there — all that’s needed to unlock the nation’s oil wealth is capital, time and effort. Sure, I’m old enough to remember the false promises of an Iraqi oil boom post-2003. Yet a pro-Western and pro-business government could turn Venezuela into a large source of incremental petroleum supply in the decade following 2030.
For a long time, Saudi Arabia has realized, even if never acknowledging publicly, that its biggest OPEC+ ally was a dysfunctional Venezuela. The more the Latin American nation sank, the more oil-market share it ceded to the kingdom. Still little understood, the arrival of socialism to Venezuela in late 1998 was a seminal moment for the oil market, one that, alongside the rise of China and convulsion elsewhere in the Middle East, paved the way to a multi-decade bull run.
A US-enforced change of ideology in Caracas may end that rally by eliminating one of the market’s few remaining positive narratives: Where would the extra crude come from in a decade’s time? The answer would become obvious: Venezuela.
Perhaps sensing that the risk of a supply shock is minimal and the potential oil prize is large, President Donald Trump has ordered a small armada into the Caribbean Sea, including America’s most powerful aircraft carrier, the Gerald R. Ford, and its battle group of escort warships. The initial excuse was a counter-narcotics operation. By now, however, the military build-up includes the kind of weapons — B-1 Lancer strategic bombers and amphibious assault ships — more often used to topple governments than to blow up small drug boats.
Trump has kept everyone guessing about his real intentions. But asked on Sunday whether Maduro’s time was up, he replied: “ I would say yeah.” Increasingly, regime change appears more a question of when — and how — rather than if. The Gerald R. Ford carrier left the Mediterranean on Tuesday; the Atlantic crossing takes about seven to 10 days, so any military campaign is unlikely before the second half of this month. The key window, then, is from about Nov. 15 to the days before Christmas.
Whether a show of force, perhaps alongside limited strikes, can force Maduro out is another matter. The Venezuelan strongman, who rose to power in 2013 after the death of his mentor Hugo Chavez, has built a large and multi-layered patronage network. Everyone who’s anyone in the Latin American nation, particularly in the military and the state-owned national oil company, Petróleos de Venezuela SA, is on the take. So those with the power to topple the regime have the most to lose from its collapse. Rather than push Maduro out, as Trump hopes, his inner circle may rally around the very well-greased flag pole.
Oil is unlikely to become a battleground. If Trump presses ahead with a bombing campaign, he’s unlikely to target Venezuelan oilfields, refineries or export terminals. As the White House demonstrated in Iran earlier this year, its priority would be to keep the conflict as far away from the energy market as possible.
In any case, Venezuela isn’t comparable to the Islamic Republic. The latter is the world’s fifth-largest oil producer; the former is the 21st. Venezuelan output, down nearly 70% over the last 25 years, is too small to impact the global supply and demand balance. Right now, it pumps about 1 million barrels a day, up from the 100-year low of 350,000 barrels a day set in 2020 but down from nearly 3.5 million barrels a day in 1998. Importantly, the nation contributes just 0.9% of global oil supply, down from more than 11% in 1965 and 4.8% as recently as 1998.
And Caracas doesn’t have the power to disrupt the energy market beyond its own borders. Unlike its ally Iran, which controls one side of the Strait of Hormuz and has the oilfields of Saudi Arabia within striking distance, Venezuela doesn’t have any significant foreign oil targets at hand.
At most, Maduro could try to hit the petroleum industry of neighboring Guyana, Trinidad and Tobago, Curacao and Aruba. Go back 25 years, and Curacao and Aruba were important, mostly as big refining and storage hubs serving the US; today, only Guyana is significant for the oil market, and I doubt that Venezuela has the military might to target it. If it does, by now, surely Washington has naval assets at hand protecting the Guyanese industry, controlled by Exxon Mobil Corp. and Chevron Corp.
Oil remains Venezuela’s economic lifeblood, so Maduro is unlikely to turn off the taps himself in retaliation. The US barely imports any Venezuelan crude these days. Still, if a military strike goes ahead, 1 million barrels a day of supply would be at risk, and that isn’t nothing. Crucially, Venezuelan crude is of a particular variety appreciated by some sophisticated refineries.
The potential impact of social unrest is noteworthy. In 2002, months after a failed coup against Chavez, oil workers launched a strike that pushed output down by 80% for several months. The regime responded by firing more than 18,000 employees of the national oil company, replacing them with loyalists.
Over the medium term, a change in leadership in Caracas would put the country’s incredibly rich Orinoco Belt oil reserves — similar to those in the Athabasca oil sands basin of Alberta, Canada — in play. The region contains more than 15% of the world’s oil, giving Venezuela the potential to produce significantly more than it does today.
At one point in the 1990s, Caracas had a plan to boost output first to 5 million barrels a day and then to 6.5 million. The arrival of Chavez, who U-turned Venezuelan oil policy and aligned with Saudi Arabia, put an end to that vision. Then the Venezuelans expropriated the assets of some of the foreign companies, and others left due to US sanctions.
It was politics, rather than commerce, that stopped Venezuela from becoming an oil giant. But politicians come and go, as do political ideologies; geology is immutable.
This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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