Rising Venezuelan Oil Exports Help Insulate The US From Energy Crisis

If the primary purpose behind the Trump Administration’s snatch-and-grab operation against the illegitimate president of Venezuela, Nicolás Maduro, was not readily apparent in January, it should be crystal clear today.  Under Maduro, around 75% of the country’s energy exports were going to China.  This year, the US will be receiving around 50% of the oil supply while China’s share is reduced to 10%.   

The stunning shift in the direction of oil shipments is helping to insulate the US from shortages caused by the war in Iran and the closure of the Strait of Hormuz.  Likely, this was part of the plan from the very beginning.  However, the real benefits of the new relationship with Venezuela will not be readily apparent until the end of this year. 

Prices at the gas pump for Americans are high since the start of the war with an average of $4.30 per gallon, but decidedly tame compared to most of Europe.  The UK is currently at $8 per gallon and Germany at $9.30 per gallon.  A portion of these crushing prices is owed to Europe’s abusive energy taxation model and carbon agenda, but another big factor is Europe’s lack of strategic energy independence (except for Norway). 

The US has positioned to avoid a similar fate.  Oil export analysts and industry insiders suggest that without the regime change in Venezuela as well as a handful of other policy actions, gas prices in America would be much higher than they are now.  This does not protect the US from the interdependency of global markets (or market speculation), but in real terms, there is no threat of supply shortages. 

In 2024-2025, only 500,000 barrels of oil per day were shipped to the US from the Strait of Hormuz (around 7% of total exports).  This deficit is now being met by Venezuelan production and there’s more on the way.   

Currently the only American oil company operating in Venezuela, Chevron is bringing in tankers filled with 400,000 barrels of oil to its Pascagoula refinery in Mississippi, which can process a maximum of 330,000 barrels a day of heavy crude oil.  Though Venezuela holds around 17% of global oil supply, the dilapidated infrastructure and communist corruption reduced their output to around 1% of global production.  This is about to change.

With investment, Chevron plans to increase its Venezuelan production by about 50% over the next couple of years.  Fortune notes that the best-case scenario for Venezuelan oil production is about 1.2 million barrels daily by the end of 2026, according to Francisco Monaldi, director of the Latin America Energy Program at Rice University’s Baker Institute for Public Policy.

Oil service companies are preparing equipment and rigs for transport to Venezuela as the new government prepares a review of gas and oil contracts; a move which would have been thought impossible only a year ago.

Europe is, not surprisingly, trying to get in on the action.  Spanish Prime Minister Pedro Sánchez strongly condemned the US capture of Venezuelan leader Nicolás Maduro, labeling it a violation of international law.  However, Spain’s Repsol is now seeking to increase production at Venezuela’s ​Cardon IV gas field, taking advantage of the regime change.  Italy’s Eni is also looking for new opportunities to invest and develop Venezuelan fields. 

The changes in Venezuela and the positive outlook for increased oil production do little to solve the immediate global supply crisis and price inflation in the making due to the Hormuz closure.  But, the new supply does help in preventing sharper spikes at the gas pump in the US. 

The capture of Maduro seems to have greater long term implications for energy markets rather than short term advantages.  Ultimately, it serves to further insulate the US from outside supply shocks over the next few years while eliminating a vital resource for China and the CCP.