The familiarity of the images from Caracas jarred some viewers.
Armed vehicles roaming the streets. The US kidnapped the country’s leader. a later assurance from Washington that the operation was decisive, necessary, and complete, as well as President Donald Trump’s warning of a “second, bigger wave” in the event of “resistance.”
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Venezuela’s president’s arrest and US military assault have shook people far and beyond Latin America. The oil markets have experienced a muted response. The implications for the Middle East and North Africa are more profound, involving geopolitical precedent, energy security, and the lingering question of whether oil continues to shape the world order in the manner that it did before.
Production and oil wealth are ruined
More than Saudi Arabia, whose reserves total about 267 billion barrels, is estimated to be 303 billion barrels, or 17% of the global total.
The two countries’ oil production, however, tells a starkly different story.
Venezuela produced 934, 000 barrels per day in November, less than 1% of the world’s demand, compared to the 3 million barrels it pumped in the late 1990s and the early 2000s, according to OPEC data.
Hugo Chavez’ presidency gave way to the decline, which continued under Maduro. Following Maduro’s second inauguration as president, US sanctions were then implemented in January 2019.
The sanctions were intended to compel Venezuela’s government to change. By closing a crucial loophole, known as oil-for-debt swaps, that caused the country’s economy and oil industry’s final, steep collapse, their main goal was to cut off the state’s oil income.
Additionally, the US threatened secondary sanctions against any foreign company doing business with Venezuela’s PDVSA, which has a full embargo on all transactions. The sanctions prevented the import of diluent chemicals needed to process Venezuela’s heavy crude and halted oil exports to Venezuela’s main remaining markets, including India and the European Union.
The Venezuelan government then resorted to having the central bank print more money, causing a wave of hyperinflation that destroyed salaries and savings. The humanitarian crisis that followed was the primary cause of the nearly 8 million Venezuelans’ exodus that started in 2019.
Venezuela’s oil industry was already in decline long before the sanctions, according to Carole Nakhle, CEO of Crystol Energy, an energy advisory firm.
She told Al Jazeera, “The collapse precedes sanctions.” Before restrictions were put in place, the industry was weakened by corrupt mismanagement, politicisation, and underinvestment. By restricting access to markets, operations, and finance, sanctions then accelerated and amplified the decline.
PDVSA struggled to keep even basic operations running for years due to years of capital flight, technical decline, and decaying infrastructure.
Why did the markets not sigh in dismay?
Oil prices dropped despite US military intervention. West Texas Intermediate (WTI) dropped below $58 while Brent crude dropped to about $60 per barrel. As investors assessed the impact of Maduro’s disappearance in the Asian markets on Monday, oil prices dropped.
Oversupply is the source of the drop, which is the explanation.
Brazil, Guyana, Argentina, and the US are all releasing new barrels into the market. The International Energy Agency predicted supply could surpass demand by as much as 2 million barrels per day in 2026, while OPEC+ has begun voluntary cuts totaling nearly 4 million barrels per day.
The US intervention can be seen as a clean, surgical, and necessary act due to the markets’ lack of reaction. The long-term reality is masked by it.
The ten-year project, which will require hundreds of billions of dollars in investment and technological transfer, will require the work of Venezuela’s new US-aligned managers. When those barrels finally arrive, they will aim to deliberately lower OPEC+ and, as some analysts predicted, to cause a deliberate price crash to devastate rival nations like Russia.
Expectations of a near-term Venezuelan shock are misplaced, according to Cornelia Meyer, chairperson and chief economist of LBV Asset Management.
Less than 1% of the global supply would be represented by the full return of Venezuelan barrels, she told Al Jazeera. Instead of being flooded by it, “markets would absorb it.”
The “type of oil” that is still significant
Venezuela’s significance doesn’t just come down to volume, though. It’s all about the quality.
Similar to the tar sands from Canada, the majority of Venezuelan crude is “heavy.” This type of oil was originally processed in numerous US Gulf Coast refineries. Heavy crude, while some have evolved over time, still accounts for the US refining industry.
Despite being the biggest oil producer in the world, the US still imports a lot of crude. Heavy oil accounts for about 60% of US imports, and it comes from Canada, making up about 70% of that.
Nakhle noted that Venezuela could slowly re-enter the system at this point.
She said it’s unlikely to see a significant short-term increase. “Activity is primarily focused on stabilizing existing output. For any significant expansion, institutional reform, and transfer of technology would be required.
Not everyone agrees with caution.
The US intervention, according to Tony Franjie, head of energy fundamentals at SynMax Intelligence, will fundamentally alter the oil market’s course.
He told Al Jazeera, “I would not underestimate the ability of US oil companies to increase Venezuelan production more quickly than anyone anticipated.” These refineries were constructed for Venezuelan crude, and Chevron will be the main player.
“Get ready for sub- $50 WTI”, he said. The oil market is already under pressure, he said.
According to Franjie, Canada would suffer the most as a result of Venezuela’s return, which would cause oil prices to drastically drop.
However, Meyer remained skeptical. She warned that “upstream production is not a light switch.” Infrastructure constraints don’t disappear overnight, according to the saying.
What does Middle Eastern implications result from this?
Venezuela is a footnote in an era of abundance for the oil markets. It serves as a reminder to the Middle East that even though oil is reduced, geopolitics is still pushed in dangerous directions by interventions rarely stay contained.
Increased production in Venezuela does not pose a risk to producers in the Middle East.
In the near future, nations like Saudi Arabia and Iraq operate on a scale that Venezuela can’t. Venezuelan production would significantly affect Middle Eastern export strategies if, despite optimistic projections, Venezuelan production were to be too low.
The “precedent” that the US action establishes is more crucial.
Long-term instability that spanned the region was caused by interventions in Iraq and Libya. With 30 million people living in Venezuela, it faces a similar fate.
Nakhle remarked that the real risk is not oil supply, but rather instability.
She claimed that “markets can handle Venezuelan barrels.” They can’t afford to cause a protracted political unrest.
Beyond oil: Strategic undercurrents
Washington has argued that the energy-related operation in Venezuela was not unique.
More than 90% of the world’s rare earth minerals’ refining capacity is in China. China supports PDVSA financially and embeds itself in mining operations that produce essential minerals for advanced weapons systems because of its close economic ties to Venezuela.
Russia deployed military advisers, according to reports that Iran built drone factories on Venezuelan soil, in line with Trump’s 2025 US National Security Strategy, which rejects post-Cold War hegemony for an America First realism.
Venezuela has evolved into a strategic hub for rival countries within the traditional US sphere of influence, according to Washington.
The intervention has resurrected long-held misconceptions about US retaliation when challenged by the dollar-denominated oil trade. As Venezuela fought for closer integration with the BRICS bloc, which includes China and Russia, it had increasingly accepted the yuan and other currencies for crude.
However, experts advised against overstating this. Oil is traded in a variety of currencies today, and the dollar’s standing is more dependent on financial security and trust than enforcement.
The petrodollar is evolving, not collapsing, as Meyer put it. Only Venezuela can put an end to it.
Trump promised US businesses would aid in the recovery of Venezuela’s oil industry. Little can be reassured by his country’s history and track record.
Iraq and Libya serve as examples of how changing the government can’t guarantee a recovery. Years are required to rebuild oil infrastructure. Even longer wait times for appointments.
Source: Aljazeera
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