Benchmark crude oil costs might be impacted considerably by escalating army tensions between the U.S. and Venezuela, with the Trump administration tightening strain on Nicolas Maduros’ regime and signaling the potential for a U.S. incursion.
That’s what Rystad Power said in a market replace despatched to Rigzone by the Rystad Power staff late Thursday, including that Venezuela at present produces 1.1 million barrels per day of crude oil, “putting this quantity in danger relying on the size of army exercise”.
“Though the amount is small by way of international commerce flows, the standard is exclusive as over 67 % of the output is heavy,” Rystad highlighted within the replace.
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Rystad Power’s Head of Geopolitical Evaluation, Jorge Leon, famous within the replace that “the lack of Venezuelan volumes would seemingly end in stronger crude oil costs within the Pacific Basin, with China and India depending on the heavy provide”.
“Dubai costs are prone to develop stronger premiums to Brent crude whereas different heavy grades will strengthen towards the sunshine grades. Some upward motion in Brent and West Texas Intermediate (WTI) costs can also be anticipated with the general lack of Venezuelan provide,” he added.
Leon went on to warn within the replace that volatility within the area is unlikely to subside within the quick time period.
“The geopolitical threat premium stays firmly embedded in oil markets, with upside worth dangers persisting as merchants brace for attainable setbacks or renewed escalation,” he mentioned.
“Over the approaching days and weeks, the stability between cautious optimism and entrenched uncertainty will proceed to form market sentiment,” he added.
Within the replace, Rystad highlighted that Venezuela “claims to have the most important confirmed reserves on this planet, round 300 billion barrels as of 2024, concentrated within the Orinoco belt with most being heavy oil”.
The corporate famous within the replace that its estimates level in the direction of 4 billion barrels of confirmed and 23 billion barrels of found reserves.
“In any case, giant reserves prompted important funding traditionally from quite a few nations: China, Russia, Iran, and the U.S. to call just a few,” Rystad mentioned within the replace.
“In the end, irrespective of serious reserves, technical issues and underinvestment have resulted in regular declines in manufacturing for the reason that early 2010s. At its peak, Venezuela was accountable for almost three million barrels per day, however declines set in following a governmental change and nationalization of belongings,” it added.
Rystad said within the replace {that a} trough was hit in 2020 when the overall averaged 624,000 barrels per day.
“Along with the output drop, most of Venezuela’s refining capability is just not operational as amenities have fallen into disrepair,” Rystad mentioned.
“Whereas many home refining amenities have stopped working, the PDVSA (The Petróleos de Venezuela, S.A) does personal and function a number of areas internationally,” it added.
Rystad highlighted within the replace that, in 2024, Venezuela produced 975,000 barrels per day of crude oil, of which 657,000 barrels per day was heavy.
“Gentle and medium crude oil manufacturing averaged 116,000 and 201,000 barrels per day, respectively,” the replace famous.
“Venezuela’s manufacturing was roughly one % of worldwide provide however 4.5 % of worldwide heavy crude oil provide in 2024. This yr is anticipated to be a peak yr, topping out at 1.11 million barrels per day. Manufacturing is anticipated to say no slowly to 901,000 barrels per day by the tip of 2030,” it added.
“Of this, the overwhelming majority has traditionally been exported to both the U.S., China, Spain, or India. Pre-2020, the cut up of crude oil exports was comparatively even between these 4 nations. As of 2025, nevertheless, U.S. sanctions have compelled exports to be diverted to China, which in 3Q25 was the vacation spot for 81 % of Venezuelan exports,” it continued.
Rigzone has contacted the White Home, the Consular Part of Venezuela in the UK and Eire, the State Council of the Individuals’s Republic of China and the Worldwide Press Heart of China’s Ministry of International Affairs, and India’s Ministry of Exterior Affairs for touch upon Rystad’s replace. On the time of writing, not one of the above have responded to Rigzone.
In a report despatched to Rigzone by the Commonplace Chartered staff final week, Commonplace Chartered Financial institution Power Analysis Head Emily Ashford said that, “within the occasion of a regime change in Venezuela”, Commonplace Chartered Financial institution “would count on a short-term discount in oil to the market, tightening the heavy-sour market, earlier than any lifting of sanctions led to the resumption of respectable gross sales”.
“Venezuelan oil manufacturing has taken a precipitous slide from 2017 onwards, with a slew of sanctions prohibiting its entry to monetary markets. Manufacturing has slowly risen from its September 2020 low of 360,000 barrels per day, heading again in the direction of a million barrels per day, supported by black-market gross sales,” Ashford added.
The Power Analysis Head went on to state that “a long-term and full restoration in Venezuela’s oil exports to the two.5 million barrels per day it sustained over 2011-2015 will likely be a multi-year course of”.
Rigzone has contacted the White Home and the Consular Part of Venezuela in the UK and Eire for touch upon the Commonplace Chartered report. On the time of writing, neither have responded to this Rigzone request.
To contact the creator, e-mail andreas.exarheas@rigzone.com
