Oil prices fall as Trump eyes Venezuela's vast reserves

Monday 05 January 2026 - 15:20

Oil prices dropped on Monday as markets weighed President Trump's plan to overhaul Venezuela's energy infrastructure and tap the world's largest proven crude reserves following the capture of President Nicolás Maduro over the weekend. West Texas Intermediate, the U.S. benchmark, fell 53 cents to 56.79 dollars per barrel, while Brent slipped 50 cents to 60.26 dollars. Despite the geopolitical shakeup, traders focused on supply fundamentals over instability risks, with analysts pointing out Venezuela currently accounts for under 1 percent of global output.

Trump declared on Saturday that major U.S. oil companies would pour billions into repairing Venezuela's dilapidated oil infrastructure and ramping up production. The South American nation holds 303 billion barrels in proven reserves about 17 percent of the global total but decades of mismanagement have slashed output from a 1970s peak of 3.5 million barrels per day to around 900,000 today.

Francisco Monaldi, who leads Latin American energy programs at Rice University's Baker Institute for Public Policy, estimates boosting Venezuelan production by three million barrels per day would demand roughly 100 billion dollars in investment over a decade. Helima Croft, head of global commodity strategy at RBC Capital Markets, notes oil executives operating in Venezuela say at least 10 billion dollars annually is needed, assuming a stable security environment.

Goldman Sachs analysts, led by Daan Struyven, stuck to their 2026 price forecasts, 56 dollars per barrel for Brent and 52 dollars for WTI while cautioning a gradual Venezuelan output rebound could pressure prices downward in 2027 and beyond. The bank figures that if Venezuela hits 2 million barrels per day by 2030, it could shave 4 dollars off benchmark oil prices.

The political upheaval jeopardizes a key energy partnership with China, Venezuela's top oil buyer. Shipments of Venezuelan crude to China averaged over 600,000 barrels per day in December 2025, making up 5 to 8 percent of China's total petroleum imports. Chevron remains the sole major U.S. oil firm active in Venezuela, accounting for about 25 percent of national production and exporting around 140,000 barrels daily. Exxon Mobil and ConocoPhillips exited in 2007 after the government nationalized their assets, leaving billions in unpaid compensation.

JPMorgan Chase analysts suggest a smooth political transition could lift Venezuelan output to 1.3-1.4 million barrels per day within two years and potentially 2.5 million over the next decade. They warn, however, that transition disruptions could halve production temporarily.