Trump says US is taking control of Venezuela’s oil reserves. Here’s what it means

(CNN) — President Donald Trump on Saturday said the US would take control of Venezuela’s massive oil reserves and recruit American companies to invest billions of dollars to refurbish the country’s gutted oil industry.

Venezuela is sitting on a massive 303 billion barrels worth of crude — about a fifth of the world’s global reserves, according to the US Energy Information Administration (EIA). That trove of crude will play a central role in the country’s future.

Oil futures don’t trade on the weekend, so the near-term impact on the price of oil is a bit of a guessing game, but Trump said the US would operate the Venezuelan government for the time being.

“We’re going to have our very large United States oil companies — the biggest anywhere in the world — go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure,” Trump said at a news conference at Mar-a-Lago.

A US-led revamp could eventually make Venezuela a much bigger supplier of oil and could create opportunities for Western oil companies and could serve as a new source of production. It could also keep broader prices in check, although lower prices might disincentivize some US companies from producing oil.

Even if international access were fully restored tomorrow, it could take years and incredible expense to bring Venezuelan oil production fully back online. Venezuelan state-owned oil and natural gas company PDVSA says its pipelines haven’t been updated in 50 years, and the cost to update the infrastructure to return to peak production levels would cost $58 billion.

“For oil, this has the potential for a historic event,” said Phil Flynn, senior market analyst at the Price Futures Group. “The Maduro regime and (former Venezuelan President) Hugo Chavez basically ransacked the Venezuelan oil industry.”

Control of Venezuela’s oil trove

Venezuela is home to the largest proven oil reserve on Earth, but its potential far outweighs its actual output: Venezuela produces only about 1 million barrels of oil per day — about 0.8% of global crude production.

That’s less than half of what it produced before Maduro took control of the country in 2013 and less than a third of the 3.5 million barrels it was pumping before the Socialist regime took over.

International sanctions on the Venezuelan government and a deep economic crisis contributed to the decline of the country’s oil industry — but so did a lack of investment and maintenance, according to the EIA. Venezuela’s energy infrastructure is deteriorating, and its capacity to produce oil has been greatly diminished over the years.

Venezuela simply doesn’t produce enough oil to make that big a difference.

Oil prices have been in check this year because of oversupply fears. OPEC has ramped up production, but demand has fallen off a bit as the global economy continues to struggle with inflation and affordability after the post-pandemic price shock.

US oil briefly rose above $60 a barrel when the Trump administration began seizing oil from Venezuelan vessels, but it has since fallen to $57 a barrel again. So the market’s reaction — if investors believe the strike is bad news for oil supply — will almost certainly be muted.

“Psychologically it might give it a bit of a boost, but Venezuela has oil that can be easily replaced by a combination of global producers,” Flynn said.

Venezuela’s oil potential

The kind of oil Venezuela is sitting on — heavy, sour crude — requires special equipment and a high level of technical prowess to produce. International oil companies have the capability to extract and refine it, but they’ve been restricted from doing business in the country.

The United States, the world’s largest oil producer, has light, sweet crude, which is good for making gasoline but not much else. Heavy, sour crude like the oil from Venezuela is crucial for certain products made in the refining process, including diesel, asphalt and fuels for factories and other heavy equipment. Diesel is in tight supply around the world — in large part because of sanctions on Venezuelan oil.

Unlocking Venezuelan oil could be particularly beneficial to the United States: Venezuela is nearby and its oil is relatively cheap — a result of its sticky, sludgy texture that requires significant refining. Most US refineries were constructed to process Venezuela’s heavy oil, and they’re significantly more efficient when they’re using Venezuelan oil compared to American oil, according to Flynn.

“If indeed this continues to go smoothly — and it looks like a masterful operation so far — and US companies are allowed to go back and rebuild the Venezuelan oil industry, it could be a game-changer for the global oil market,” Flynn said.

Trump called Venezuela’s oil business “a total bust.”

“They were pumping almost nothing by comparison to what they could have been pumping and what could have taken place,” Trump said.

“We’re going to have our very large United States oil companies — the biggest anywhere in the world — go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country,” he added.

What’s next for oil prices

It is unclear how energy prices will be impacted by the US intervention in Venezuela.

Bob McNally, president of Washington, DC-based consulting firm Rapidan Energy Group, told CNN that he thinks the impact on prices would be “modest,” but he doesn’t expect much of an impact “unless we see signs of widespread social unrest and things look messy. More likely if this looks ‘stable.’”

“The prospect is then how quickly could a Venezuela that is pro-US increase its production. That will be the parlor game. Perception may race ahead of reality. People will assume Venezuela can add oil faster than they actually can,” he said.

“Venezuela can be a huge deal but not for 5 to 10 years,” McNally said.

Oil markets open on Sunday night. Prices will depend on whether Trump “can manifest the turnaround” of Venezuela’s oil sector, according to Helima Croft, head of global commodity strategy at RBC Capital Markets.

“It all hinges on whether Venezuela defies the recent history of US-led regime change efforts,” Croft told CNN. “President Trump signaled the US is back in ‘nation-building mode,’ and that US companies will make the requisite investments to ensure the revival of the oil sector. I think we need far more details before we declare ‘Mission Accomplished.’”

CNN’s Matt Egan contributed to this report.

The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

This story has been updated with additional content.