Written by: Jeremy Jason Chan
On January 3, 2026, American military forces carried out a strike on Caracas,
the capital of Venezuela, in which they captured and imprisoned Nicolas Maduro, the
country’s president of over ten years. This marked the culmination of months of military
escalations between the United States and Venezuela, in which the USA established a
blockade on Venezuelan oil tankers and struck alleged drug boats (PBS News 2026).
Among the many justifications used by the Trump administration for these actions, a
key one is gaining access to Venezuelan oil, with Trump himself stating his intention to
“get the oil flowing” (WPLG Local 10 2026). This article examines how Venezuela’s oil
industry fared under Maduro, and how American involvement may affect its future.
Over the course of Maduro’s tenure, the Venezuelan oil industry has seen a
sharp decline. From when he first took office in 2013 to his arrest in 2026, oil
production fell by almost 1.5 million barrels per day (Palacios et al., 2026). This fall has
been associated with a variety of factors. A paper by Jorge Jraissati and Keith Jakee
attributes the collapse to mismanagement of the nationalized oil company by Maduro
and his predecessor Chavez, who used the company funds to achieve political
objectives and enrich political allies (Jraissati and Jakee 2022). Another factor which
harmed Venezuela’s oil industry were exogenous shocks such as the fall of oil prices
during that period, and US sanctions. Mark Weisbrot and Jeffrey Sachs have argued
that US sanctions imposed in 2017 and 2019 under the first Trump administration were
the cause of Venezuela’s falling oil production (Weisbrot and Sachs 2019). Because Venezuela’s economy is heavily dependent on oil, the decline in the oil industry has
been reflected in all of the economy: the country’s GDP shrank by over 70 percent
between 2012 and 2020, and has faced double-digit inflation for more than 40 years
(Rodríguez 2026).
The regime change will have significant effects on Venezuela’s most important
industry: oil. Following Maduro’s removal, the USA has effectively taken control of
Venezuela’s oil industry, with revenue being sent through US-supervised channels,
and the Venezuelan government requiring US approval for its monthly budget
(Melimopoulos 2026a). In addition to this, acting president Delcy Rodríguez signed into
law a bill allowing private companies greater control over the oil market in a bid to
encourage private investment (Rogero 2026). These changes have seemingly worked
to some extent, with major companies such as Chevron and Shell seemingly looking to
boost production in the area (Parraga and Buitrago 2026). Venezuela possesses the
world’s largest oil reserves, at roughly 300 billion barrels of oil. Additionally, the Trump
administration has stated that they aim to secure $100 billion in private investment in
order to revitalize the industry (Plummer 2026). If this reinvestment is successful,
Venezuela has the potential to experience significant growth; at its pre-crisis oil output,
optimistic estimates see Venezuela achieving triple its current per-capita income over
the next decade.
Although many are hopeful that US involvement will revitalize Venezuela’s oil
industry, a full restoration of Venezuela’s oil production will be costly and time-
consuming. Venezuela’s crude oil reserves are primarily composed of “heavy” oil, which is more difficult to refine than “light” crude oil. This slightly restricts demand for Venezuelan oil to those who are willing to engage in the costly refining process, causing it to trade at a slight discount to lighter forms of oil (AFPM Communications 2025). In addition to this, Venezuela’s oil industry has faced a longstanding decline, dropping from 3.5 million barrels of oil a day in 1997 to only 840,000 barrels a day in 2025 (Jaffe 2026). Among the issues is Venezuela’s oil infrastructure: significant amounts of machinery are in a state of disrepair or damage, with impoverished oil workers stealing parts to sell on the black market (Mery Mogollón and McDonnell 2026). Many areas formerly associated with the oil industry have also become depopulated, with many people leaving due to a lack of opportunity once oil production stopped. As a consequence, many skilled workers have left key oil extraction centers, to other places in Venezuela or other countries entirely. An example of this would be the Maracaibo basin; once a prosperous oil drilling center, industry observers estimate that currently less than 2,000 wells are functioning out of the former 12,000. Thus, the true extent of the investment needed to revive the oil industry is unknown, and the proposed interventions may not be enough to arrest the decline.
Another factor crucial to Venezuela’s future is its precarious political situation.
Currently, the country is led by interim president Delcy Rodríguez, formerly Maduro’s
vice president (Reuters 2026). Besides Maduro’s capture, the Venezuelan
government has seen few other changes, retaining most key figures from the
Maduro regime. In particular, it remains to be seen how the USA’s newfound
presence in the country will affect key government officials such as Diosdado Cabello,
who faces a $25 million US bounty on narco-terrorism charges, or Vladimir
Padrino, who carries a $15 million bounty for drug trafficking charges (Melimopoulos
2026a). Another key figure is María Corina Machado, whose opposition party was
widely recognized to be the legitimate winner of Venezuela’s 2024 presidential
elections (Wendler 2026). Currently enjoying significant popular support, she has
stated an intention to return to Venezuela at some point in the future . However, the
existing government has refused to hold elections, in spite of the contested nature of
the 2024 elections (Melimopoulos 2026b), and the Trump administration does not
appear to have new elections as a priority either (Bergengruen and Leary 2026). The
current political instability in Venezuela has a massive impact on its economy, in
particular its ability to secure capital. Investors remain uncertain about the future
actions of the government, seeing Venezuela as a significant risk, Exxon Mobil CEO
Darren Woods describing Venezuela as “uninvestible” in its current state (Escobar
2026). While some are cautiously optimistic, others are not confident about the new
government. As such, the interim government’s ability to navigate a transition to
democracy will be significant towards the performance of the economy.
Venezuela’s future following Maduro’s arrest remains volatile. Under a new
government with American support, many are hopeful that Venezuela will be able to
attain the potential promised by its large oil reserves. However, persistent issues such
as institutional conflict and an oil industry in decline may make this vision difficult to
realize. Though Maduro’s arrest has brought optimism in some circles, many
challenges remain for both economic recovery and a transition to more inclusive
political systems.
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