Risks surrounding Venezuela, which holds the world’s largest oil and gas reserves, are rising significantly. With President Nicolás Maduro calling on Russia, China, and Iran for assistance in facing a potential military confrontation with the United States, anxiety is growing across global oil and gas markets over the possibility of a new conflict.
The growing U.S. military buildup around Venezuela — officially described by the Trump administration as a campaign against the country’s alleged role in international drug trafficking — closely resembles the “military training exercises” carried out by Vladimir Putin’s Russia before its invasion of Ukraine.
Although no official decision has yet been announced in Washington, military sources suggest that armed action or even a full-scale invasion of Venezuela has received preliminary approval. President Trump appears to be preparing for multiple scenarios in a move that could reshape the balance of power in Latin America and the Caribbean while deeply impacting global oil markets, with major geopolitical implications involving Russia, China, and Iran.
Venezuela holds the world’s largest proven crude oil reserves, estimated at about 303 billion barrels as of 2023 — around 17% of global reserves — yet its total output remains far below potential levels.
At present, the country produces only 1 to 1.1 million barrels per day, reflecting a steep decline in its production and refining sectors due to international sanctions, infrastructure deterioration, lack of investment, and technical challenges in processing its heavy crude oil.
Despite its vast potential, Venezuela today represents a “giant in distress,” struggling not only to extract its high-sulfur crude but also to export it effectively to world markets.
Current Venezuelan output is concentrated mainly in the Atlantic basin, with most exports directed to China and a few joint ventures authorized by the United States.
However, ongoing U.S. sanctions and deep internal instability have triggered an acute economic and political crisis that continues to cripple any future development prospects.
While Venezuela’s output volume may not seem critical in absolute terms, the strategic importance of its supply lies in the *type* of crude it provides to the market.
Any U.S. military operation would inevitably disrupt or damage export ports, processing units, and logistics facilities, resulting in a loss far exceeding “just another million barrels.”
Although Venezuela is not a major player in the global LNG market, any military strike would freeze the Dragon gas project connecting the country with Trinidad and Tobago, which feeds the Atlantic LNG complex — a move that would have broad psychological effects on global gas markets.
For Europe, the main exposure would come through prices rather than physical shortages — namely through Brent crude benchmarks, diesel margins, and rising geopolitical risk premiums across the Atlantic basin.
The United States could compensate in terms of overall volumes by boosting light sweet crude output, but its refineries would suffer significant disruptions due to imbalances in their feedstock mix.
After collapsing in the late 2010s, Venezuelan oil output experienced a modest recovery.
Between 2024 and 2025, production rebounded slightly thanks to selective licenses and stronger Chinese demand, yet it remains around 1–1.1 million barrels per day, with about 1 million barrels exported.
Despite the limited quantities, the composition of Venezuelan crude makes it a critical factor in global refining, as the country is the largest exporter of heavy, high-sulfur crude and ultra-heavy Orinoco blends — precisely the grades needed by complex refineries on the U.S. Gulf Coast and parts of Asia.
Any drop or halt in Venezuelan output would force refineries to substitute with fuel oil and other residual products, and several U.S. refiners have already begun sourcing replacements from the Middle East and elsewhere to offset the loss of Venezuelan and Russian heavy crude.
At this stage, some form of military action appears increasingly likely, with uncertainty centered on how it might unfold.
In a limited-strike or naval-blockade scenario, export terminals such as the José port would be directly affected, causing partial damage to processing and storage facilities.
Insurance premiums would surge, risk-averse shipping crews would withdraw, and war-risk insurers would retreat — driving an immediate rise in Brent prices and widening the spread between heavy and light crude. Diesel margins would likely follow higher as well.
In a prolonged campaign lasting several months targeting industrial infrastructure, the main damage would fall on upgrading and processing units such as Petropiar and PetroMonagas, constraining logistics and sharply reducing exports.
This scenario would create a structural shortage of heavy crude in the Atlantic basin, though OPEC+ might partially offset the quantitative losses.
The larger problem, however, would be the shift in crude quality, pushing diesel prices higher in Europe and reducing refinery efficiency along the U.S. Gulf Coast — raising the likelihood of lasting repercussions.
A more alarming possibility is that the Trump administration could pursue regime change or a full occupation of Venezuela — a scenario that would unleash widespread instability, freeze capital expenditure, and collapse condensate and naphtha logistics.
In such a case, rehabilitating the oil sector could take 12 to 18 months and require billions of dollars in reconstruction and modernization efforts.
This represents a major risk to global markets even for those who believe current oil supplies are abundant. A “million Venezuelan barrels” means more than a number — refineries deal with operational chemistry, not spreadsheets.
Trump’s advisers must recognize that heavy, high-sulfur crude provides essential diesel feedstocks that light shale oil cannot replace.
They should also note recent months, when Gulf Coast refiners increasingly turned to imported fuel oil to offset lost Venezuelan and Russian supplies.
The consequences would not be limited to the U.S. alone; Europe would also feel the impact.
Because European buyers pay global prices for crude, any disruption in Venezuela would translate directly into higher industrial and consumer fuel costs.
Since Russia’s invasion of Ukraine in 2022, Europe has relied heavily on U.S. diesel and gasoline exports following sanctions on Russian products.
Any reduction in U.S. refining output would raise import bills and expand diesel premiums in Europe.
Middle Eastern and Indian exports might cover part of the shortfall, but at higher cost, and the full effects of new Western sanctions on Russia remain unclear.
Trump has already begun targeting indirect trade in Russian petroleum products.
As analysts point out, every disruption in the crude-mix balance underscores that while global market equilibrium matters, molecular chemistry, geography, and insurance dominate the first three to nine months of any conflict.
It would therefore be prudent for European policymakers to begin diversifying product sources, building inventories of specific crude types, and preparing logistical and insurance contingencies in advance.
As with Ukraine, the warning signs are visible, and mobilization appears underway — the question no longer seems to be “whether the United States will act against Venezuela,” but “when.”
Any assessment must also consider the military dimension. As Helmuth von Moltke once said: “No plan survives first contact with the enemy.” Dwight Eisenhower later added: “In preparing for battle, I have always found that plans are useless, but planning is indispensable.”
In other words, preparation is essential — even if the outcomes of any U.S. action against Venezuela remain uncertain.
A large-scale operation could invite unwanted intervention from third parties, particularly Russia, China, and possibly Iran.
Toppling Maduro would deal a severe blow to Vladimir Putin’s regional ambitions and weaken China’s growing influence in Latin America.
Iran, meanwhile, remains the “wild card,” maintaining strong economic and military ties with Caracas.
And with recent reports of Russian aircraft delivering advanced weapons and missiles to Venezuela, any potential conflict now threatens to evolve beyond an energy crisis into a wider regional — and possibly global — confrontation.
