A potential U.S. intervention in Venezuela could lead to a short-term surge in oil prices. Analysts, however, expect prices to fall later if sanctions are lifted following a regime change.
Venezuela holds the world’s largest proven crude oil reserves, estimated at over 300 billion barrels—around 20% of the global total. Most of this is heavy crude, which is compatible with U.S. Gulf Coast refineries. During previous sanctions, Canadian heavy crude partially replaced Venezuelan supply. A return of Venezuelan exports could reduce demand for Canadian crude in North America.
Production Decline and Market Impact
Venezuela’s oil production has fallen sharply over the past two decades. Wood Mackenzie reports output at about 900,000 barrels per day this year. This compares with 2 million barrels daily in 2017 and 3 million barrels two decades ago. November exports averaged roughly 900,000 barrels per day, the third-highest of 2025, according to Reuters.
Sanctions and years of mismanagement have contributed to the decline. Some U.S. observers say a new government could allow U.S. producers to return to Venezuelan oilfields. This could increase supply, triggering a short-term price spike due to market uncertainty. Prices may later decline if sanctions are lifted and production expands.
Treasury Secretary Scott Bessent highlighted that interventions affecting major oil producers, including Venezuela, could influence energy prices. He noted that developments in Venezuela or other regions, such as Russia-Ukraine, could further lower oil and gasoline prices, supporting affordability.
Implications for Canadian Oil and Global Markets
The potential return of Venezuelan crude to Gulf Coast refineries would also affect Canadian oil. Analyst David Blackmon said increased Venezuelan supply could reduce demand for Canadian heavy crude. He suggested that Canada diversify export markets beyond the U.S., including China, to mitigate risks.
Venezuela’s reserves remain a significant long-term resource. However, accessing them could trigger short-term market volatility. Analysts continue to monitor U.S. policy and the Trump administration’s approach to Venezuela, adding a new layer of uncertainty to global oil markets.