Attention has shifted to how quickly Venezuela, which holds the world's largest proven crude oil reserves, can ramp up production following the recent arrest of its President, Nicolas Maduro. Although former U.S. President Donald Trump suggested that American companies would invest billions to rebuild the nation's energy infrastructure in the long term, significant doubts remain regarding whether major oil firms are willing to invest in such an uncertain environment. In the near term, it remains unclear how much oil Venezuela can export and whether its oil shipments to China will continue. The following are analysts' views on Venezuela:
Analysts at RBC Capital Markets, including Helima Croft, stated in a report that a segment of the market will likely adopt a "mission accomplished" mindset and readily incorporate a path to restoring production to 3 million barrels per day into their forecasts. They added that if a peaceful transfer of power occurs, a full lifting of sanctions could potentially unlock several hundred thousand barrels per day of production within the next 12 months. However, they cautioned that the situation remains highly unstable, reminding market observers that the country's path to recovery will be protracted.
Neil Shearing, Chief Economist at Capital Economics, noted in a report that, in theory, Venezuela could re-emerge as a major oil producer given it still claims the world's largest proven oil reserves. However, he emphasized a vast gap between theory and reality, pointing out that at the very least, Venezuela's geopolitical alliances remain unclear following Maduro's arrest. Shearing also stated that even if production were to rebound to its level of around 3 million barrels per day from a decade ago, it would only add approximately 2% to global oil supply.
Analysts at Goldman Sachs Group, including Daan Struyven, suggested in a report that if Venezuela's crude oil production were to decline by 400,000 barrels per day by year-end, Brent crude prices could average $2 per barrel higher than their base case forecast of $56 for the year. Conversely, a production increase of 400,000 barrels per day could result in prices being $2 lower. Goldman Sachs further stated that, combined with recent higher-than-expected output from Russia and the U.S., the potential for higher long-term Venezuelan production adds further downside risk to their price forecasts for 2027 and beyond. They estimate that in a scenario where Venezuelan crude production reaches 2 million barrels per day by 2030 (compared to 900,000 in their base case), it could create a $4 per barrel downside risk to their 2030 oil price forecast.
Arne Lohmann Rasmussen, Chief Analyst at Global Risk Management, indicated that the market reaction might be limited due to ample global oil supplies. He noted in a report that while Venezuela is renowned for its massive proven reserves exceeding 300 billion barrels, reserves are one thing and production is another, with the country's current output at approximately 1 million barrels per day. Rasmussen added that because Venezuelan crude is heavy and sour, only specific refineries in the U.S. and China can process it, and the potential loss of such oil does not pose a particularly difficult problem for the global market.
