SEATTLE (Oil Monster): The U.S. military’s ouster of Venezuelan President Nicolás Maduro is set to swiftly reroute the country’s oil exports back toward the United States – and away from China. That will give U.S. refiners an immediate boost, but President Donald Trump’s plans to revive production in the Latin American country may be slower to materialize.
Speaking on Saturday after announcing Maduro’s arrest on Truth Social, Trump said he would maintain the U.S. embargo on exports of sanctioned Venezuelan crude oil for now, but also stated that the U.S. would run Venezuela "for a period of time," suggesting U.S. restrictions could be lifted very soon.
Benchmark oil prices had edged higher in recent weeks as Washington stepped up its military and economic pressure on Caracas. But any new disruption to exports will likely have a limited impact on the global oil market, particularly since supplies are set to sharply exceed demand in 2026.
Venezuela, once a major producer, last year pumped only around 900,000 barrels per day, accounting for less than 1% of global supply. This followed years of shrinking investment due to failed government policies and sanctions.
It was unclear how Venezuela's regime change will unfold, but a peaceful shift to a U.S.-friendly regime would almost certainly lead to the repeal of Washington’s sanctions.
This will offer Venezuela’s creaking oil sector a much-needed reprieve and, perhaps more importantly, redraw the global refining map.
REFINERY RE-ROUTE
A smooth transition in Caracas will likely result in a rapid rerouting of Venezuelan oil exports, re-establishing the U.S. as the major buyer of the country's volumes.
Oil refineries along the U.S. Gulf Coast, the country's main refining and exporting hub, were built decades ago to process heavy-grade crude – the type Venezuela exports – for products such as gasoline, diesel and jet fuel.
Although the U.S. crude oil mix dramatically changed following the boom in domestic shale oil – a light grade – in the early 2010s, many refineries still require heavy grades to optimise operations.
Venezuelan crude exports to the U.S. reached a peak of 1.4 million bpd in 1997, when they accounted for 44% of Venezuela's production, according to the Energy Information Administration. The flow gradually declined to 506,000 bpd in 2018 as supplies of competing heavy grades from the U.S., Mexico and Canada increased.
Venezuelan exports collapsed to zero between 2020 and 2022 after Trump imposed direct oil sanctions on the state-owned energy company PDVSA. But they then recovered to 227,000 bpd in 2024 and 140,000 bpd in the first 10 months of 2025 after Washington in 2020 issued Chevron a waiver to continue operating its joint ventures in Venezuela.
Courtesy: www.reuters.com
