Small rise in Venezuelan oil supply possible over next two years, analysts say

By Florence Tan and Anjana Anil

SINGAPORE/BENGALURU, Jan 5 (Reuters) – Crude output in Venezuela could increase up to half a million barrels per day in the next two years if Venezuela is politically stable and U.S. companies invest there, oil analysts said following the U.S. capture of President Nicolas Maduro.

U.S. President Donald Trump said Washington would take control of the oil-producing nation and that U.S. oil majors would invest billions of dollars in the country to pump more crude.

Venezuela sits on one of the world’s largest estimated oil reserves, but pumps less than 1% of global supply after decades of mismanagement and underinvestment in the sector. 

A large rise in output would take several years and potentially hundreds of billions of dollars of investment, analysts said.

Companies that might want to invest there would need to deal with security concerns, dilapidated infrastructure, questions about the legality of the U.S. operation to snatch Maduro and the potential for long-term political instability, they added.

With a political transition, Venezuela could raise oil production to between 1.3 million and 1.4 million barrels per day within two years and potentially reach 2.5 million bpd over the next decade, JPMorgan analysts said in a note.

Venezuela’s production averaged around 1.1 million bpd in 2025.

The easing of U.S. sanctions, which have been in place since 2019 on state oil company PDVSA, may lead to an increase in Venezuela’s oil output to 1.5 million bpd in two years, said Carlos Bellorin, executive vice president of energy trends and analysis at upstream consultancy Welligence Energy Analytics.

Any recovery in production would likely be gradual and require substantial investment, Goldman Sachs analysts said in a January 4 note.

Goldman analysts estimated a $4 per barrel reduction to 2030 oil prices in a scenario where Venezuela crude production rises to 2 million bpd.

In the short term, Venezuela’s oil production outlook this year will depend on how U.S. sanctions policy evolves, Goldman analysts said, adding they saw ambiguous but modest risks to oil prices.

Goldman’s 2026 oil price forecasts remained unchanged, with Brent expected to average $56 a barrel and West Texas Intermediate to average $52 a barrel.

Capital Economics anticipates lower oil prices and political instability will impede efforts to capitalize on Venezuela’s energy resources, despite Trump’s push for oil companies to ramp up production in the country.

“Although a pick-up in Venezuelan oil production to ~1.5-2m bpd seems feasible over the next two years or so, this would still only be about half the level seen in the hey-day of oil production,” Capital Economics said.

Venezuela produced as much as 3.5 million barrels per day of crude in the 1970s, which at the time represented over 7% of global oil output. Production fell below 2 million bpd during the 2010s.

(Reporting by Florence Tan and Anjana Anil; Editing by Lincoln Feast, Simon Webb, Muralikumar Anantharaman and Nia Williams)