New Delhi: Venezuela produced about 820,000 barrels per day (b/d) of crude in November 2025, but output is expected to decline following the US naval blockade imposed on December 17, according to Wood Mackenzie. The consultancy estimates production could fall by 200,000–300,000 b/d in early 2026, as market participants withdraw and inventories force curtailments.
The removal of President Nicolás Maduro and his transfer to US custody has raised expectations of a possible easing of sanctions. However, analysts warn that any near-term increase in Venezuelan oil supply would come into an already oversupplied market, adding pressure on prices.
Why markets are reacting cautiously?
Despite the political development, the oil market’s response has been muted. Wood Mackenzie points out that global oversupply is already expected in 2026, particularly in the first quarter. Any relaxation of US sanctions that allows Venezuelan crude to return to US refiners could generate quick dollar inflows for the country but would also add barrels to a market struggling to absorb existing supply.
According to the consultancy, this could push Brent crude below the mid-to-high $50 per barrel range projected for the first quarter of 2026.
“Venezuela offers the scale major producers need, but the fundamentals work against rapid deployment,” said Alan Gelder, Senior Vice President, Refining, Chemicals & Oil Markets at Wood Mackenzie. “Heavy crude economics at current prices, unresolved legal claims, and political uncertainty create a risk profile that extends well beyond typical above-ground challenges. Companies will watch, but commitments require more than sanctions relief.”
Can production rebound quickly?
In the short term, some recovery is possible. Existing dormant wells could be restarted with basic workovers funded through export revenues. Under favourable conditions, this could allow an additional 200,000–300,000 b/d to come back within months.
But several constraints remain. These include weakened service sector capacity, security concerns, damaged infrastructure and limited access to diluents required for heavy crude production.
What it would take to return to peak levels?
Venezuela last produced around 2 million b/d in 2016. Reaching those levels again would require multi-billion-dollar investment, according to Wood Mackenzie. The economics remain challenging, with breakeven costs for key Orinoco belt projects above $80 per barrel Brent, alongside uncertainty around fiscal terms, legislation and contract enforcement.
Outstanding arbitration awards linked to asset nationalisations nearly two decades ago further complicate the investment environment.
Lessons from Libya
Historical precedents suggest caution. Libya’s oil sector took nearly a decade to recover after the fall of Muammar Gaddafi, and output there still remains below pre-2010 levels. Wood Mackenzie sees this as a reminder that political change does not translate into rapid production recovery.
Implications for refining and global trade
Before sanctions, Venezuela was a major refined product exporter, with the Paraguana complex among the world’s largest. Crude processing has fallen by 75% since 2010, from nearly 1 million b/d to around 250,000 b/d in 2025. Any long-term revival of refining capacity could pressure margins in the Atlantic Basin, particularly in Europe.
In crude markets, increased Venezuelan exports would alter trade flows, diverting Middle Eastern heavy crude toward Asia and intensifying competition with Canadian crude on the US Gulf Coast.
Why oil companies remain cautious?
Venezuela’s resource base continues to attract interest from major producers. Current partners include Chevron, Repsol, CNPC and Eni, alongside PDVSA. Companies that exited earlier, such as ExxonMobil and BP, retain experience but remain on the sidelines.
Wood Mackenzie concludes that while Venezuela’s barrels matter to global supply balances, large-scale reinvestment will depend on sustained political stability, contract certainty and competitive fiscal terms — conditions that remain unresolved.
