U.S. President Donald Trump’s proposal to assume control of Venezuela’s oil sector and engage American corporations in its revitalization post the apprehension of leader Nicolas Maduro in a raid is expected to encounter various challenges — operationally, legally, and politically. The dramatic capture of Maduro marked the culmination of an intense pressure campaign by the Trump administration against Venezuela’s autocratic ruler, involving months of clandestine deliberations and culminating in the most decisive American action to effect regime change since the 2003 Iraq invasion.
Washington has charged Maduro with narco-terrorism, while the Venezuelan government has long alleged that Trump and the U.S. sought to exploit the country’s abundant natural resources. Venezuela possesses the world’s largest confirmed crude oil reserves, estimated at around 303 billion barrels, surpassing those of Canada and Saudi Arabia, and constituting roughly 17% of the global oil reserves. Despite these vast reserves, Venezuela’s crude oil production has dwindled to less than 1% of the global supply.
In 1999, Venezuela was producing up to 3.5 million barrels per day, but production plummeted significantly around 2016, stabilizing at the current rate of approximately one million barrels per day as per OPEC figures. The decline in production can be attributed to various factors, presenting multiple obstacles that Trump must navigate to realize his ambition of exporting Venezuela’s oil.
Heather Exner-Pirot, the director of energy, natural resources, and environment at the Macdonald-Laurier Institute, highlighted that Venezuela’s oil industry has deteriorated due to nationalization, mismanagement, and corruption. The sector, along with other segments of the economy, has been severely impacted by stringent U.S. sanctions imposed since 2015, when Caracas was labeled a national security threat. Subsequent sanctions in 2017 and 2019, during Trump’s first term, significantly curtailed Venezuelan oil exports to the U.S., culminating in a recent complete blockade on the industry termed a “quarantine on their oil” by Secretary of State Marc Rubio.
Roxanna Vigil, an international affairs fellow at the Council on Foreign Relations, emphasized that reviving the oil sector in Venezuela could span years, if not a decade or more, requiring tens of billions of dollars. The sector also faces a brain drain of skilled labor following the dismissal of thousands of workers by then-president Hugo Chavez in response to a 2003 strike.
Trump announced intentions to allow major U.S. oil companies into Venezuela to invest billions in repairing the dilapidated infrastructure and generating revenue for the country. Francisco Monaldi, the director of the Latin American energy program at Rice University, pointed out that apart from the infrastructure challenges, attracting foreign investment hinges on factors like political stability and contractual frameworks.
Venezuela would need to overhaul its constitution to foster a more business-friendly environment and transition the entire economy away from socialism. Trump’s plan has raised legal uncertainties, with experts questioning the lawfulness of the recent U.S. operation and the broader implications of seizing control of Venezuelan oil. Matthew Waxman, a Columbia University law professor and former national security official, highlighted concerns about enriching an occupying military power through the exploitation of another state’s resources, citing UN Resolution 1803 emphasizing nations’ sovereignty over their natural resources.
While the U.S. has amassed a military presence in the region and Trump has expressed intentions to “run” Venezuela, legal and political complexities loom large over the prospects of American involvement in the Venezuelan oil industry. Stephen Miller, the White House deputy chief of staff, insinuated historical American contributions to Venezuela’s oil industry and criticized its alleged exploitation by Venezuelan regimes.