Analysts told CNBC on Saturday that President Donald Trump’s overthrow of President Nicolas Maduro in oil-rich Venezuela is unlikely to cause a shock to energy markets in the short term.
Arne Roman Rasmussen, principal analyst and head of research at A/S Global Risk Management, said that while the scale of the US attack was unexpected, markets were already pricing in a conflict with Venezuela that would disrupt oil exports.
Venezuela is a founding member of OPEC and has the world’s largest proven oil reserves. But the South American country currently produces less than 1 million barrels of oil per day, less than 1% of global oil production, Rasmussen said.
Only about half of production, about 500,000 barrels, is exported, Rasmussen said. He said the conflict was also caused by the global oil market being oversupplied and relatively weak in demand, a pattern common in the first quarter of this year.
Rasmussen estimated as follows. brent crude oil When futures trading begins Sunday night, prices will only rise by about $1 to $2, or less. He expected Brent to fall slightly below Friday’s closing price of $60.75 next week.
He said: “Despite this being a huge geopolitical event where you would normally expect oil prices to go up and up, there is still too much oil on the market and that’s why oil prices haven’t skyrocketed.”
Rapidan Energy analyst Bob McNally said he was advising clients before the weekend that about a third of Venezuela’s oil production was at risk. He told CNBC that he does not expect all production in Venezuela to be halted, but that it does not pose a significant risk to the oil market in the short term.
The oil market in 2025 recorded the largest annual decline in the past five years. Brent crude, the global benchmark, fell about 19% last year, while U.S. crude oil fell nearly 20%. The market is under pressure after OPEC+ increased production after years of cuts. The United States also produced a record level of just over 13.8 million barrels per day.
Analysts told CNBC that oil prices could fall further as regime change makes it more likely that Venezuela’s oil production will eventually increase.
Saul Kavonic, head of energy research at MST Financial, estimates that exports could approach 3 million barrels in the medium term if sanctions are lifted and foreign investors return with a new Venezuelan government.
“If anything, the future of Venezuela is going to have a bearish impact on the market because there’s really no other way to go but up,” said David Goldwyn, an energy industry consultant who served as a senior State Department energy official in the Obama administration.
The current embargo on Venezuelan oil remains in place, President Trump said at a press conference on Saturday. He also said U.S. oil companies would invest billions of dollars to rebuild Venezuela’s energy sector. President Trump did not provide details about which companies would invest and how, nor did he say how the United States would temporarily run Venezuela “as a group.”
Goldwyn said it’s difficult to predict whether U.S. oil companies will invest, given the uncertainty surrounding Venezuela’s interim government and future government.
“What we’ve learned about regime transitions in Iraq, Afghanistan and other countries is that transitions are difficult,” he said. “No company will invest billions of dollars in a long-term business until we know what the terms are. And we won’t know what those terms are until we know what the government will do.”
Mr. Goldwyn added that the following companies: exxon mobilis still waiting for the collection of debts owed by Venezuela’s state oil company Petroleos de Venezuela SA (PDVSA).
Rapidan Energy’s McNally said it’s a complex proposition for U.S. oil companies. He said oil-producing countries have not forgotten that they were forced out of Venezuela in the early 2000s when the country seized the assets of foreign oil companies. However, he added that access to the world’s largest oil reserves would be “intriguing” for U.S. oil companies once sanctions are lifted.
But that would require decades of investment and billions of dollars, McNally said. Whether it’s worth it comes down to one central question, he said. “Does the world need that much oil?”
“Until the end of last year, the market consensus was that oil demand growth would stop within four years,” McNally said. “Because of electric vehicles, fuel economy policies and climate change policies, demand growth stopped.”
But as other countries, including the United States, China and Canada, weaken climate policies and electric vehicle sales decline, the prospects for investing in Venezuela have become more attractive.
“All of a sudden you’re going to start saying, ‘Hey, we need more oil,'” he says.
— Additional reporting by CNBC’s Victor Loh
