At the start of 2026, the Trump administration once again dominates global headlines—much as it did at the beginning of 2025. Then, the flashpoint was tariffs on aluminium and steel imports; now, it is the US military strike on Venezuela. In the early hours of January 3, 2026, around 2 a.m. local time, the United States launched a military operation codenamed Operation Absolute Resolve; and within the next few days, speculation over Washington’s motives and the broader consequences has intensified.
Well, President Donald Trump has been unequivocal about the intent. Following the seizure of President Nicolás Maduro, Trump announced that the US would assume control of Venezuela to tap into the South American nation’s vast oil reserves. This move is quite a familiar geo-political pattern as oil has been a strategic resource in international conflicts. From World War II (1939-1945) to Gulf War (1990-91), oil was a recurring factor for all the geo-political conflicts. The US intervention in Venezuela appears to follow the same script.
The attraction is obvious and it is the 303 billion barrels of proven crude oil reserves - nearly one-fifth of the world’s proven reserves, according to the US Energy Information Administration (EIA). This places Venezuela well ahead of Saudi Arabia with oil reserves of 267 billion, Iran 209 billion, Iraq 145 billion, the UAE 113 billion, Kuwait 102 billion, and so on and so forth.
But despite these massive reserves, Venezuela produces barely one million barrels a day. According to data from the Organization of the Petroleum Exporting Countries (OPEC), Venezuela produced 934,000 barrels per day in November – which were less than 1 per cent of global supply and a fraction of 3.5 million barrels per day that it used to churn out at its peak in the late 1970s.
The decline began under former President Hugo Chavez and carried on with Maduro, primarily attributed to chronic underinvestment, poor maintenance, and deterioration of infrastructure. PDVSA, Venezuela’s state-owned oil company, has admitted that pipelines have not been upgraded in last five decades. Sanctions also compounded these structural weaknesses. By cutting off oil-for-debt swaps, US-led sanctions severed the country’s primary revenue stream, thus resulting in the collapse of both the economy and the oil sector.
Now, estimates suggest that investments of USD 58 billion to USD 180 billion would be required over the next 15 years to take the country’s oil production to its historical highs.
Trump has pledged to make this investment by accumulating all the United States oil producers that are prepared to enter Venezuela and invest to restore oil production in the country. This announcement has particularly triggered two dominant lines of speculation: whether Washington intends to monetise Venezuelan oil to ease its staggering debt burden, or whether the oil will be channelled as a strategic input for domestic heavy industries and energy security.
To address the first speculation, if the production of 3.5 million barrels per day can be restored and sold at USD 60 per tonne, then annual revenue could reach roughly USD 76 billion. This revenue figure is less than 8 per cent of the annual interest that the United States pays against its debt. So, let alone the debt of USD 38.4 trillion incurred until 2025, oil revenue of this scale can hardly pay the interest.
Contrary to expectations of a geopolitical supply shock, oil prices fell after the US attack. Brent crude slipped to about USD 60 a barrel, while West Texas intermediate (WTI) dropped below USD 58, on projections of oversupply. As new barrels are entering the global market from Brazil, Guyana, Argentina, and the US, and OPEC+ is unwinding voluntary cuts totalling nearly 4 million barrels a day, International Energy Agency (IEA) projects oversupply of 2 million barrels per day in 2026.
Moreover, oil exploration takes institutional investment and time (at least a few years). Today, only one US company, Chevron Corporation, operates in Venezuela. Establishing full-scale infrastructure for exploration and refining could take three to four years. Complicating matters further, Venezuela’s crude is predominantly heavy and high in sulphur, making refining more complex and costly.
In near terms, thus Washington’s gains appear limited. According to a current update, Venezuela is expected to hand over 30-50 million barrels of sanctioned oil to the US. At market prices of around USD 60, this would generate USD 1.8–3 billion. Even when combined with tariff revenues, which is projected at around USD 300 billion by the end of 2025, this income falls well short of covering annual debt interest, though it may offer a temporary fiscal cushion. The tariff revenue projection came amidst a sharp rise in collections. In May alone, the Treasury reported gross customs duties of USD 22.8 billion, nearly four times higher than the USD 6.2 billion collected in the same month of 2024.
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So, what if the United States utilises this oil for its heavy industries? The country is heavily reliant on crude oil imports, sourced majorly from Canada and Mexico. In 2024, the US imported 6.6 million barrels per day of crude oil. Canada was the largest source, accounting for 62 per cent of total imports, followed by Mexico at 7 per cent. Instead, with the control over Venezuela oil, the US can become self-reliant. While on one hand, the country can meet the requirement of oil with the world’s largest oil reserves, on the other hand, it can compensate its domestic energy crisis by processing crude oil into energy. The US Energy Information Administration explains one barrel of oil is equivalent as about 6 gigajoules (1.7 megawatt-hours) energy. Considering that, then 303 billion barrels of oil could be utilised to produce 1,818 billion gigajoules energy.
However, America’s energy challenge is less about absolute supply and more about access, affordability, and grid reliability. If these concerns are fixed, then industries the United States could be able to overcome the power crisis they face now. By 2030, US energy demand is expected to grow by 25 per cent from 2030 from 2023 levels, driven by AI-powered data centers, electric vehicle (EV) adoption, and building electrification.
For now, Trump has stated that the oil will be sold on international markets. At current prices of around USD 56.50 per barrel, Venezuela’s 303 billion barrels are valued at approximately USD 17.1 trillion -about 45 per cent of the United States’ national debt. Whether this theoretical valuation ever translates into strategic or fiscal advantage remains uncertain. What is clear, however, is that Venezuela’s oil is now a central piece in the geopolitics of power, debt, and energy.
