Cocaine and crude oil. U.S. President Donald Trump accuses Venezuela of being a narco-state and its president, Nicolás Maduro, of leading the Cartel of the Suns, an alleged drug trafficking organization. Beyond the unsubstantiated accusations leveled by the Republican, Venezuela has the world’s largest oil reserves, which Trump considers to be rightfully Washington’s: Venezuela must return “the oil, land, and other assets that they previously stole from us,” he said on Tuesday.
On Monday night, the Republican president announced a “total and complete blockade of all sanctioned oil tankers” entering and leaving Venezuela, as part of his administration’s offensive against Maduro, which includes a massive military deployment in the Caribbean. The White House seeks to depose the Venezuelan leader. It maintains that he is an illegitimate president after claiming victory in the disputed 2024 elections. It has also designated him as a terrorist after the State Department asserted, without evidence, that he is the leader of the Cartel of the Suns, a narco-terrorism network that allegedly reaches all the way to the very top of the Chavista regime and connects it with the most powerful criminal forces in Mexico and Colombia.
But regardless of Trump’s supposed interest in ousting Maduro, crude oil is emerging as the ultimate prize for U.S. multinationals. Venezuela boasts the world’s largest oil reserves, surpassing even those of Saudi Arabia or Canada. However, decades of underinvestment, corruption, mismanagement, and controversial expropriations have driven away foreign companies. Without their capital and technology, local businesses have been unable to exploit Venezuela’s abundant Orinoco Belt oil fields, which hold more than 15% of the world’s total reserves.
Venezuela is a country rich in natural resources. In addition to oil, it has significant reserves of natural gas, gold, iron, bauxite, and coltan, one of the minerals needed for batteries. It also possesses large deposits of copper, nickel, titanium, and zinc.
“They want Venezuela’s oil and gas reserves. For nothing, without paying,” said Venezuelan Vice President and Minister of Petroleum Delcy Rodríguez last month.
Venezuela, a founding member of OPEC, currently produces just over one million barrels per day, a far cry from the 3.5 million barrels it produced at the end of the 1990s, when it was a global power in the hydrocarbon sector, accounting for 10% of world crude oil production. Now, the Bolivarian Republic barely represents 1%.
To get an idea of the sector’s decline in Venezuela, the country’s oil industry was once the world’s largest exporter. Now it ranks 21st among global producers. And it is about to be overtaken by its neighbor, Guyana, a much smaller country.
Analysts believe that if Caracas were to grant licenses to foreign companies and offer economic guarantees that it would not repeat the expropriation of the 1990s, Venezuela could become an oil powerhouse again starting in the 2030s.
Venezuelan oil is also special and distinctive. It is heavier and more expensive to extract than Middle Eastern oil, but its high sulfur content makes it particularly coveted by more sophisticated refineries. Despite sanctions in place for almost a decade, which were tightened a few months ago by Trump, Venezuela sells crude to China, India, and also to Washington.
The United States is currently the world’s largest oil producer, with 13.6 million barrels per day. The Trump administration’s strategy of prioritizing fossil fuels over renewables is giving fracking a second life. The question is: how many reserves does the U.S. have left? “At that rate of production, it barely has reserves for 10 years,” explains Víctor Álvarez, a Venezuelan political analyst and former Minister of Industry and Mining. “Despite the growth of renewable energy, fossil fuels still cover 78% of global consumption and will maintain a significant presence in the next two decades. Oil will continue to be key for heavy transport, aviation, and the petrochemical industry, with demand beginning to decline after 2035. However, peak demand does not mean the end of fossil fuels,” adds the analyst, a critic of the Maduro government.
“Trump’s authoritarian tendencies are not driven by restoring democracy or defending human rights, but by controlling the oil and minerals needed by the military and high-tech industries in the United States. In his mercantilist and business-oriented vision, any agreement must guarantee his control over these resources,” Álvarez adds.
Florida Congresswoman Maria Elvira Salazar elaborated a few weeks ago on the idea that the United States’ objective is to acquire oil and natural gas from Caracas. In an interview on the conservative network Fox Business, the Republican legislator asserted that Venezuela “for the American oil companies, will be a field day.” During her remarks, she added: “There is an enormous business opportunity for American energy companies. We’re talking about more than a trillion dollars of economic potential, and American companies must have their piece of the pie.”
The U.S. company Chevron remains the only major foreign group licensed to operate an oil field in Venezuela in partnership with PDVSA. Last spring, the Spanish company Repsol and the Italian company Eni lost the licenses that allowed them to continue doing business in the Caribbean country. And some Russian companies have used various methods to circumvent U.S. sanctions.
Despite the complex situation in the industry, the country is highly dependent on the sector. Ninety-five percent of its foreign revenue comes from oil sales. China is PDVSA’s main customer. The Asian giant buys Venezuelan oil surreptitiously: it acquires it through small refineries in Shandong province and uses ghost tankers to transport it, circumventing the U.S. embargo by concealing the origin of their cargo.
Venezuelan crude oil exports to China have increased by 95% this year following the tightening of sanctions imposed last spring by Trump. This is precisely one of the arguments used by White House advisors to justify increasing pressure on Venezuela: to prevent Beijing from gaining more influence in the region.
The expropriation that changed everything
Venezuela nationalized its oil industry in 1976, and until Hugo Chávez came to power in 1998, Petróleos de Venezuela, SA (PDVSA) was the second-largest oil company in the world. In the 1990s, during the administration of Rafael Caldera, the oil sector was opened up, or internationalized, and agreements were made with foreign companies to increase crude oil exploration and production. Chávez, however, ended these collaborations and then expropriated the Venezuelan assets of major companies in the sector, such as ConocoPhillips and ExxonMobil, which refused to transfer majority control to the state. Since then, PDVSA, with its 85,000 employees, has become an instrument of power and corruption.
Therefore, the relationship between Washington and Caracas has experienced a series of ups and downs, leading to the current situation. In 2017, during Trump’s first term, the United States imposed harsh sanctions, prohibiting trade with Venezuela and funding for PDVSA. These restrictions have impoverished the country and further deteriorated oil production, making the sector increasingly inefficient.
Maduro assumed the presidency of Venezuela in 2013 after Chávez’s death. He has been accused of rigging elections and clinging to power, using force to suppress protests. The opposition denounces corrupt practices and harassment aimed at silencing them. Maduro offered oil and licenses to the United States in exchange for ending Trump’s pressure, according to The New York Times.
Opposition leader María Corina Machado has asserted that if the current government were ousted, the new administration would reverse nationalization policies and grant new operating licenses to foreign companies. “American companies in Venezuela stand to gain even more wealth — $1.7 trillion — over the next 15 years,” she stated.
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