Analysis of the Impact of Improved U.S.-Venezuela Relations on the Oil Market and Energy Investments

Based on the latest market data and analysis reports, I will systematically expound on the analysis of the impact of improved U.S.-Venezuela relations on the oil market and energy investments.

As a member of OPEC, Venezuela was once a major global oil producer. According to the latest data [1], the country’s current daily production is approximately 800,000-950,000 barrels, accounting for less than 1% of global supply. In 2024, Venezuela’s average daily production was 952,000 barrels, a recovery from 783,000 barrels in 2023 [1].

• China accounts for 81.7% of the export share, making it the largest buyer of Venezuelan crude oil [1]
• The U.S. accounts for 15.8% of the import share, as the second-largest buyer [1]
• Cuba imports approximately 2.5% [1]

Historically, Venezuela was once a major foreign oil supplier to the U.S., with a peak daily supply of 1.5-2 million barrels [1]. However, political turmoil, mismanagement of PDVSA, investment shortages, and U.S. sanctions have led to a continuous decline in production.

Venezuela has the world’s largest proven oil reserves, with particularly abundant reserves in the Orinoco Belt. It is also the world’s ninth-largest natural gas holder, with natural gas reserves accounting for approximately 73% of South America’s total [1]. However, infrastructure is severely outdated, and there is a serious shortage of technological investment.

According to the International Energy Agency (IEA) December 2025 report, the global market is expected to see a supply surplus of approximately 3.8 million barrels per day in 2026, equivalent to nearly 4% of global demand [3]. OPEC+ maintains production discipline, U.S. production has hit a new high of over 13.8 million barrels per day, and new supplies from Brazil, Guyana, and Argentina continue to exert pressure [3]. Against this backdrop, the marginal impact of Venezuela’s production capacity recovery is relatively limited.

The Trump administration has stated that U.S. oil companies will enter Venezuela to invest in repairing aging infrastructure [2]. Venezuelan heavy oil has unique qualities:

• It has special value for U.S. Gulf Coast refineries (as a diluent raw material)
• It competes directly with Canadian oil sands crude [2]

If sanctions are lifted and production capacity expands:

• China is likely to remain the main buyer, but U.S. refiners will have more procurement options
• Canadian oil sands producers will face fiercer market competition [2]
• PDVSA bonds may continue their rebound momentum [2]

• Gain access to cheaper, more readily available heavy oil raw materials
• Lower transportation costs compared to other sources (geographical advantage)

• May obtain opportunities to invest in or receive compensation for Venezuelan oil and gas assets
• Growth space brought by long-term production capacity expansion

• Has already seen a significant rebound amid expectations of improved relations [2]
• Credit risk premium is expected to narrow gradually

• Direct competition with Venezuelan heavy oil
• Market share may be squeezed

• Risk of market share dilution
• Increased difficulty in coordinating production cuts

From the current market performance, the energy sector has become one of the top-performing major sectors in the S&P 500 Index, with an intraday increase of 2.82%. This reflects positive market expectations for the energy sector [4].

Assume the U.S. maintains partial sanctions but relaxes specific restrictions:

• Venezuela’s production recovers slowly to 1.1-1.2 million barrels per day
• Global oil prices decline moderately by $1-$2 per barrel
• Marginal benefits for U.S. refiners

Assume full normalization of U.S.-Venezuela relations:

• Production may gradually recover to 1.5 million barrels per day or higher
• Large-scale investment by U.S. energy companies enters Venezuela
• Global oil prices face more significant downward pressure
• Venezuela’s debt default risk drops sharply

If the detente process reverses:

• Risk of supply disruption re-emerges
• Oil prices may see a pulse-like increase
• Uncertainty in energy investment rises

• U.S. Refiners:
  Gain cost advantages in heavy oil supply
• Integrated Energy Giants:
  Potential opportunities in Venezuelan assets
• Venezuela-Related Bonds:
  High-yield but high-risk opportunities

1. Policy Uncertainty:
   U.S. policy toward Venezuela may adjust at any time
2. Operational Risks:
   Venezuela’s infrastructure conditions and business environment
3. Oil Price Cycle:
   Downward pressure on prices amid global supply surplus
4. Geopolitical Spillover Effects:
   Regional stability impacts energy security

The impact of improved U.S.-Venezuela relations on the oil market needs to be understood from multiple dimensions. From the supply side, the recovery of Venezuela’s production capacity will increase global supply, and the direct impact on oil prices is limited in the current oversupplied market environment, but it may marginally exacerbate downward pressure. From the investment side, U.S. refiners and energy companies are expected to benefit significantly, while Canadian oil sands producers may face intensified competition.

For energy investors, it is recommended to focus on the following core logics:

[1] Al Jazeera - “What resources does Venezuela have” (https://www.aljazeera.com/news/2026/1/8/what-resources-does-venezuela-have-apart-from-the-worlds-most)

[2] Morgan Stanley - “Market Implications of U.S. Action in Venezuela” (https://www.morganstanley.com/insights/articles/market-implications-us-intervention-venezuela)

[3] IG Markets - “How does US intervention in Venezuela impact global markets?” (https://www.ig.com/en/news-and-trade-ideas/Intervention-Venezuela-implications-260106)

[4] Jinling API - Industry Performance Data [0]