Venezuela’s oil will be valuable in the West for years to come, says leading analyst

There is a global shortage of heavy oil

WHAT Venezuela’s heavy sour crude will be valued for “a number of years”

WHY Orinoco crude is coveted by some refineries on the US Gulf Coast and elsewhere

WHAT NEXT Oil companies vary in their appetite for involvement in Venezuela

Venezuela’s heavy crude production and exports are being scrutinised by analysts and politicians, amidst questions of whether the administration of Donald Trump will attempt regime change in the South American country.

Forecast low oil prices, an oil glut and the disincentive of handling higher-carbon oil - such as Venezuela’s - are factors, say experts. Venezuela’s sits atop the world’s largest proven oil reserves, but its oil industry is beset with inefficiency, lack of investment and corruption.

Even so, Venezuela’s heavy oil will be attractive for some time to come on the global market, said Francisco Monaldi, director of the Latin America energy programme at Houston's Rice University.

There is a shortage of heavy oil in refineries on the US Gulf Coast and elsewhere while there are limits to how much heavy Canadian crude can flow southwards, he noted.

“So you know there is an opportunity to increase production in Venezuela and market it pretty well for at least a significant number of years,” he told Newsbase.

“But eventually, in particularly in faster transition scenarios in which oil demand declines and the price of oil declines, Venezuela's oil is going to be less competitive,” he said.

Currently, more than half of Venezuela's production is extra heavy and more than 80% of Venezuela's reserve are extra heavy depending on how you count count the reserves, he continued.

"The reserves are a little bit costlier to extract and particularly transport than the other OPEC countries' conventional oil, but in in the longer term, the issue is that they are high in carbon intensity and as a result it's higher cost," he said.

Foreign oil companies

“There are Europeans companies that, because of that, will not touch Venezuelan oil, particularly because of the reputational cost of producing [oil] with higher carbon emissions. So companies like Shell or BP are not going to get involved in extra heavy oil in Venezuela,” he said.

“In the case of Exxon, Conoco and Chevron, I think there are different degrees of appetite. In the case of Exxon, perhaps less because they are involved in Guyana might have some reservations about going into Venezuela given the conflict, but Conoco and Chevron I think will be … interested in investing in Venezuela in a regime change scenario particularly and there might be others,” he continued.  

“Maybe some other European companies might have interest as well as Repsol… you could have a lot of smaller companies interested, including some locals and Canadian companies and other Latin American companies.”

Maduro

Venezuela’s President Nicolás Maduro could indeed leverage the country’s crude exports — which overwhelmingly flow to China — if negotiations with Washington gain traction, Reuters reported.

Prospects for dialogue have re-emerged after US President Donald Trump indicated openness to direct talks, even as his administration expands military operations in the Caribbean and intensifies pressure on Caracas.

The US designated Venezuela’s Cartel de los Soles as a foreign terrorist organisation, a step that insiders say precedes further actions. Sanctions have already constrained Venezuela’s oil industry, cutting foreign involvement and pushing Caracas toward alternative markets. Production has stabilised at around 1.1mn barrels per day this year, far below late-1990s levels. 

More than 80% of exports between June and October were shipped to China, giving Maduro room to divert cargoes should a political deal be reached. 

Analysts say crude shipments and the potential restoration of US licences are among his strongest bargaining tools. Energy expert Thomas O’Donnell told Reuters that Maduro could “send more oil to the US and protect US investment,” though such concessions may not suffice given Washington’s strengthened negotiating position because of currently flatter oil prices and oil market steadiness.

Oil Minister Delcy Rodríguez accused the US of seeking Venezuela’s vast oil and gas reserves “for nothing, without paying,” noting the strong US refining demand for heavy Venezuelan crude as domestic output trends lighter. Exports to the US through Chevron’s licence fell to half their first-quarter levels by the third quarter.

With long-term PDVSA supply contracts frozen since 2019, Venezuela has relied on discounted spot sales. The absence of firm commitments allows Caracas to redirect crude currently sent to China’s independent refiners toward the US or Europe if conditions improve. Although cash payments to PDVSA remain blocked, the company continues to use oil-for-fuel swaps to secure essential imports.

Treasury Secretary Bessent

This follows US Treasury Secretary Scott Bessent saying the US economy is benefiting from President Donald Trump’s recent “peace” agreements and suggesting that oil prices could slide further if developments unfold in Venezuela, Newsweek reported. 

Bessent argued that declines in crude and fuel costs under Trump are helping ease US living expenses. “Oil and gasoline prices are down substantially under President Trump—and that is really the key to affordability is lower energy. And energy goes into food prices,” Bessent told Laura Ingraham on Fox News

Washington’s stance comes amid escalating frictions with Caracas following more than 20 US military strikes on alleged Venezuela-linked narcotics vessels in the Caribbean, alongside the deployment of additional US military assets to the region. US officials say the operations aim to curb “narcoterrorism” and other criminal activity.

The mounting strain has implications for global crude markets and US fuel prices, given Venezuela’s status as a notable oil exporter despite its prolonged economic turmoil.

Meanwhile a Trump supporter, Republican Representative María Elvira Salazar, also argued that a potential US intervention in Venezuela would yield “very good news for the US economy,” drawing scrutiny following comments reported by Newsweek.

Speaking to Fox Business, the Florida politician underscored Venezuela’s vast hydrocarbon wealth, noting that the country holds the world’s largest certified oil reserves. Figures from Venezuela’s Petroleum Ministry suggest 303.81bn barrels recorded in 2021, with Maduro asserting in 2025 that new certifications could lift that total by roughly 30%, reinforcing the country’s position in global energy rankings.

Data from the US Energy Information Administration place Venezuela’s reserves at around 17% of global supply, largely concentrated in the Orinoco Oil Belt. This extra-heavy crude is particularly relevant for the United States, whose refining system was historically designed to process such grades.

Salazar’s remarks were unusually direct. “We can eliminate him, extradite him, or intervene and try to end his regime. This is very good news for the US economy,” she said, calling such action a “top priority for this administration from an economic perspective.”