The Venezuela Oil Push: What Does It Mean for American Oil Companies?
The Trump administration has deposed former Venezuelan president Nicolás Maduro. And U.S. President Donald Trump has been excited to open up Venezuela's oil resources to American energy companies...
President Trump has explicitly stated that he wants U.S. companies to pump out the country's oil.
Oil's reaction: up a ho-hum 1.7% the next business day.
But major oil stocks? Decidedly better... at least, at first. ExxonMobil (XOM) climbed 2.2%, while Chevron (CVX) rose 5.1% and ConocoPhillips (COP) jumped 2.6%. These stocks gave up some of their modest gains the day after.
It's a moderate response so far. The market doesn't seem too worried about geopolitical tensions or disruptions to oil supplies, but may see potential benefits for a handful of U.S. oil majors.
Venezuela accounts for about 1% of the world's oil production. But the potential benefit to oil companies, if any, would come far in the future... and would require tens of billions of dollars in investment.
The economic risks are real. A reset of Venezuelan oil production faces huge obstacles. Some of those hurdles are dealbreakers if they're not resolved satisfactorily.
That means investors need to consider carefully before making any big moves in this sector...
Five roadblocks in the way of pumping Venezuelan oil
The Trump administration seems to believe that getting oil flowing from Venezuela will be relatively easy. President Trump has suggested that U.S. oil operations could be running in less than 18 months – an estimate that differs from what energy experts have been saying.
The idea of sending U.S. operators into Venezuela faces major roadblocks. And those problems are serious enough that they could derail any such outcome more or less permanently.
These concerns range from governance issues that could stop investment before it even starts... to low oil prices and aging infrastructure in the country. Let's cover the main problems at hand...
1. The Trump administration has no real plan for how to "run" Venezuela
Political stability is a must-have for foreign investment in any country. But the ouster of Maduro creates a slew of questions about what creating stability in Venezuela will look like.
After its raid, President Trump announced that the U.S. would "run" Venezuela. But what does that mean in practice?
The U.S. has stated that it wants to see Maduro's interim successor and former vice president, Delcy Rodridguez, stop the sale of petroleum to American adversaries, among other things. If she doesn't play ball, officials suggest, she could be ousted as Maduro was.
While the U.S. has also called for Rodriguez to organize free elections, the timeline on such a step is flexible, say U.S. officials. If we see competing factions in the country vying for power just at a moment of change in control, the political environment may remain anything but stable for years.
It's still unclear how the U.S. will enforce its demands without a major investment of money and military.. And that could create further chaos and unrest.
2. Venezuelan governance threatens oil investment
On top of all that, the U.S. government must still get U.S. oil companies on board. Given the potential risks of an investment, that may be a tough sell.
It's not only a question of what the U.S. is demanding and how to get it. Venezuela has had a fraught relationship with oil companies, too. The country nationalized its oil assets in the 1970s and 2000s... a history that oil companies are well aware of.
ConocoPhillips and ExxonMobil both left the country in 2007, after then-President Hugo Chávez expropriated their investments in Venezuela. While both companies later sued for billions, they received much less than that in arbitration proceedings years after.
Moreover, after decades of instability and authoritarian rule, a lot of intellectual capital has left the country. Venezuela simply doesn't have the numbers of trained professionals that are so valuable to the oil industry.
This environment has to improve before foreign investors will feel comfortable investing in Venezuela again.
3. Venezuela's oil infrastructure is in poor shape
Venezuela's oil production has been in decline for decades. Its infrastructure is aging, and underinvestment has reduced the nation's capacity to pump.
According to Reuters, Venezuela produced about 1.1 million barrels per day in 2025 – again, that's about 1% of global production. It was producing some 3.5 million barrels per day in the 1970s.
JPMorgan analysts think production could rise to somewhere between 1.3 million and 1.4 million barrels per day over the next couple of years. But making it happen would require billions of dollars in investment – and the right political environment.
Over a longer period, it could easily cost $100 billion or more to get Venezuelan oil running at a strong pace, say analysts.
4. Oil is cheap, and U.S. oil majors may demand massive subsidies
Oil prices – at $58 a barrel – already sit near five-year lows. That doesn't give oil majors much incentive to invest heavily in production.
So, cheap oil – which Trump is promoting as the outcome of his takeout of Maduro – won't actually encourage investment in Venezuela. Oil is already cheap. The bigger problem today is keeping it above the "breakeven" price of getting it out of the ground.
Not only that, Venezuela's reserves are understood to be mostly in the central Orinoco region of the country, and they're extra-heavy crude, making them more expensive to extract and refine. So, these reserves are likely less profitable already.
With less financial reason to participate and the many risks at play in rebuilding Venezuela's oil infrastructure, President Trump has already begun dangling the possibility of subsidies in front of oil companies...
That's a huge tell about how risky the situation is. In other words, the U.S. government (and us, the taxpayers) could be left footing the bill for American oil companies.
Trump stated on Monday, "A tremendous amount of money will have to be spent and the oil companies will spend it, and then they'll get reimbursed by us or through revenue."
At this point, plans are completely unformed, however. U.S. support could take the shape of outright subsidies, but Trump has hinted at other options.
Major oil companies have stayed largely quiet for now on the potential for investing in Venezuela. They'll likely need clear deals before they put any money to work.
5. New oil won't come from the ground for many years
Even if all these issues can be cleared up enough to begin investing in the country, the real return on investment won't come for years and years.
Oil wells may have a long lifetime. And a lot of value may reside in the "long tail" of a well. That's plenty of time for the preconditions to change in ways that harm the investment. For example...
- Will any potential subsidies be scaled back with a different U.S. administration, making the investment unprofitable?
- Could a change in Venezuelan governance increase the risk of expropriation, especially given the history there?
- Is it worth starting a project in Venezuela if there's a significant chance that it can't be completed in the future?
Of course, all this is on top of the usual business risks that come with the oil space: volatile petroleum prices, production-decline rates, and geopolitics, among others.
So, a good investment may eventually go bad before it becomes sufficiently profitable.
That might not worry investors, though, if the U.S. government is bearing the investment risk through subsidies and other inducements to the oil majors to participate.
Are oil companies a good investment now?
All told, investors should think carefully about any potential investment in the stocks that might benefit from oil production in Venezuela.
This news may boost shares of companies such as ExxonMobil, Chevron, and ConocoPhillips in the short term. But it might not mean big rewards in the long term.
And with so many roadblocks in the way, projects in Venezuela may simply be untenable... almost regardless of how subsidized they are. They may simply be too high risk.
So it makes sense to focus on how oil companies are positioned for the long term... and ignore the short-term noise.
Now, oil companies may remain especially attractive long-term investments, given the continued importance of oil in our lives. But you'll want to pick your opportunities.
For example, legendary investor Warren Buffett's firm Berkshire Hathaway owns nearly one-third of the shares of Occidental Petroleum (OXY), as of August 2025. Buffett amassed the position over a period of years, so it's not just a short-term trade for him.
Oil will still remain strategically important for decades, even if the broader energy landscape shifts to increased investments in renewables. And the U.S. has become a major producer of oil, following years of investment in the sector.
Good investing,
James Royal
Editor's Note: "A strange day is coming to America."
That's according to a former Goldman Sachs executive who predicted everything from the 2022 crash, the death of the 60/40 portfolio, and even the rise of blockchain.
He's not the only one sounding the alarm:
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The Wall Street Journal calls it a "New World Order."
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The Financial Times says, "the unimaginable is becoming imaginable"... and that it could "upend the global monetary system."
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And one of President Trump's senior advisers has already laid out the plan to accelerate this trend. It's all written out, point-by-point, in black and white. (Details here.)
So, what should you do right now to come out ahead?
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