In the biggest story of the week, the U.S. launched airstrikes against Venezuela over the weekend, capturing the country’s now-ousted President Nicolás Maduro.
The operation has led to a conversation about Venezuela's state-owned oil reserves - the largest of any nation - and whether the global economy will feel the impact of volatility in the Latin American country.
The U.S. says it will now run Venezuela’s oil industry and that U.S. companies will “start making money for the country.”
Here’s what you need to know.
Context
On Saturday, Trump announced the U.S. had carried out a “large scale strike” against Venezuela.
The country’s President, Nicolás Maduro, and his wife, Cilia Flores, were captured during the operation.
(Some quick background: The U.S. has not recognised Maduro as the country’s president since the 2024 election, as Maduro was widely accused of ‘stealing’ the election. For months, the Trump administration has also been criticising Maduro over what it called his involvement in shipping drugs to the U.S.).
Maduro has since pleaded not guilty to narco-terrorism charges in a New York federal court. Narco-terrorism refers to the use of terrorist tactics by drug trafficking organisations (including, in some cases, nation states), or the collaboration between terrorist groups and drug cartels.
In the meantime, Trump has said the U.S. will “run” Venezuela until there is a transition of power.
Oil
So why has this all led to a conversation about Venezuela’s oil industry?
Venezuela has the world’s largest oil reserves — an estimated 300 billion barrels, or about 17% of all known global oil reserves, according to the U.S. Energy Information Administration.
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Despite its vast supply, Venezuela actually produces relatively little of it.
The country currently contributes about one million barrels per day, which is just 1% of the world’s total daily oil supply.
Rewind to the 1970s, and Venezuela represented 8% of the total global supply.
There are two main reasons why Venezuela produces so little of the oil it has under its territory: the technical challenges of oil production, and international sanctions.
First, the country’s state-run oil company (which, like other state-run entities, is ultimately under control of the Venezuelan Government), does not have the hardware or capacity of global oil companies to dig and process the oil.
On top of that, international sanctions makes developing that capacity near-impossible.
Trump's plans
After the operation, Trump said major U.S. oil companies would move back into Venezuela.
During a press conference on Saturday, Trump said: "We're going to have our very large U.S. oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country."
It is not clear yet how this would work, or when it would happen. However, Venezuela’s Government has already publicly indicated it will not cooperate with the U.S.
As mentioned above, Venezuela only produces about 1% of the world’s daily oil supplies, so experts don’t think the evolving situation will have dramatic impacts for consumers at the petrol pump, and oil prices should remain steady.
If President Trump’s plans to help global oil companies reinstate operations in Venezuela works, they’ll be able to produce a lot more oil than Venezuela’s state-run operation, and faster. This will mean there’s more oil out there in the market.
However, other economists warn that any increase in global instability – and threats made by President Trump to leaders of other South American nations in the days since Maduro’s arrest – can increase the risk of countries panic-buying oil reserves, and lead to situations where panic and instability force prices up.
