As we hit the one-month mark since the ousting of Venezuela’s Nicolás Maduro, it may strike many of our readers as a surprise that WTI Oil prices have spiked almost 6% in that time. Oil price movements are often best characterized by a quote from a good friend that, “nobody knows nothin’.” As a barometer of politics, economics, social change and innovation, the exploration and production of oil is perhaps one of the most complex systems on the planet. So it goes that predicting the future price of the commodity is filled with peril. Often the best approach to complex and chaotic systems is to use contrarian thinking to integrate an investment view. In that light, what appeared at first to be a liberation of oil supply, may actually turn out to be a decade or more of Warren Zevon and Lawyers, Guns and Money.
Recent geopolitical developments and the easing of sanctions have revived speculation about a Venezuelan oil “comeback.” Yet the evidence suggests that any meaningful recovery will be slow, costly and highly uncertain.
At a structural level, Venezuela’s production decline stems from the hollowing out of PdVSA. Tens of thousands of skilled workers were dismissed or driven into exile, capital was diverted toward social programs and maintenance budgets collapsed. Aging pipelines, refineries and power systems now operate in a degraded state, with some facilities described as “catastrophic.” As a result, much of today’s investment must first restore basic functionality before it can expand output.
Capital requirements further constrain recovery. Industry estimates suggest that restoring production to even two million barrels per day would require more than $100 billion and a decade of sustained investment. Merely maintaining output near current levels will demand tens of billions in spending. These figures are daunting in a country burdened by extreme debt, weak institutions and a history of expropriation.
In the near term, a modest production rebound is possible. With limited repairs, technical assistance and partial sanctions relief, production could rise to roughly 1.3–1.4 million barrels per day over the next few years. Such gains would reflect reactivating shut-in wells and improving logistics rather than true capacity expansion. While meaningful locally, this increase would have only marginal impact on global oil balances.
Security and governance represent even more binding constraints. Large parts of Venezuela remain controlled by criminal gangs, armed militias and semi-autonomous military factions. For international oil companies, this environment raises the risk of sabotage, attacks on employees and violent asset seizures. Without durable political stability and credible legal protections, major firms are unlikely to commit long-term capital at scale.
The quality of Venezuela’s resource base also tempers optimism. Much of its enormous “proved” reserves consists of heavy oil from the Orinoco Belt, which is costly and technically demanding to produce. Economic recoverability depends heavily on oil prices, infrastructure and regulatory stability. As a result, headline reserve figures overstate near- and medium-term production potential.
Geopolitically, Venezuela’s oil has taken on renewed strategic importance as US shale growth slows and conventional resources become scarcer. Washington’s involvement reflects a desire to secure future supply. However, history—from Iraq to Venezuela itself—suggests that political intervention rarely translates into rapid production gains.
Taken together, these factors imply that Venezuela’s oil sector will remain structurally constrained throughout the remainder of this decade. Incremental improvements are likely, but a return to historic production levels is improbable without sustained institutional reform, massive investment and lasting security.
For global markets, Venezuela is less a coming supply savior than a persistent wild card. Its vast reserves offer long-term optionality, but its near-term production will continue to be shaped more by the interaction of lawyers, guns and money—than by engineers.
Important Disclosures & Definitions
AAI001095 02/03/2027