What Trump’s intervention means for Venezuela and Guyana dispute

The Trump administration’s military intervention in Venezuela is expected to radically reshape regional risk, including when it comes to the South American country’s territorial claims over a large, resource-rich area in neighboring Guyana.

The U.S. operation on Jan. 3 to oust Venezuelan President Nicolas Maduro and his wife, Cilia Flores, sent shockwaves across the globe, with many condemning Washington’s actions as a breach of international law.

President Donald Trump has shrugged off those concerns, saying in a recent interview with the New York Times that he doesn’t “need international law” and that only his own mortality and mind can stop him.

Regionally, the fallout from the U.S. intervention is set to put Venezuela’s longstanding claims over the Essequibo territory on ice, analysts told CNBC, a development that likely prompted a collective sigh of relief from the energy majors operating there.

Essequibo refers to a disputed area that constitutes around two-thirds of Guyana. It is known to be rich in natural resources, such as gold and diamonds, as well as vast offshore oil reserves.

“Sighs of relief will have been exhaled in some offices, particularly on the ground, because that’s a constant threat whether you’re trying to manage logistics and so on, or making sure that ships are getting around safely,” said Eileen Gavin, principal Americas analyst at Verisk Maplecroft, a risk intelligence company.

“These are all offshore facilities — and highly expensive ones at that. So, having the U.S. armada, as they are calling it, is certainly helpful,” Gavin told CNBC by telephone.

U.S. oil majors Exxon Mobil and Chevron, as well as China’s CNOOC, are among some of the companies that operate in the offshore region administered by Guyana.

The U.S. president, who said Friday that he’d canceled a second wave of attacks on Venezuela, has been pushing for American oil companies to invest billions in the country to fully tap its expansive crude reserves.

Trump insisted a large “armada” of ships off the oil-rich country’s coast would help to protect U.S. investments.

Guyana has been transformed by an economic boom over the last decade.

A blockbuster discovery by Exxon Mobil in 2015 revealed vast reserves of high-quality crude in waters offshore Guyana, turning the small South American country of about 830,000 people into a major energy player with the world’s fastest growing economy.

The discovery caught the attention of foreign investors and oil majors, as well as neighbouring Venezuela, which claims sovereignty over the Essequibo region.

The dispute over Essequibo is more than a century old. In 1899, an international arbitral tribunal awarded the territory to Britain, when Guyana was still under its colonial rule. Venezuela has since actively disputed this. Maduro has previously accused Guyana, the U.S. and oil firms of robbing Venezuela of its territory through “legal colonialism.”

Guyana has maintained that the accord is legal and binding, and in 2018 the country had sought the International Court of Justice (ICJ) to rule it as such.

The ICJ also issued a binding order in May prohibiting Venezuela from holding elections in Essequibo, prompting Maduro’s government to reject the pronouncement. Caracas has repeatedly said it does not recognize the ICJ’s jurisdiction.

Venezuela’s Maduro has adopted an increasingly aggressive stance toward Essequibo in recent years, ratcheting up regional tensions.

In late 2023, for instance, Venezuela’s electoral authority announced citizens had approved a referendum called by Maduro’s regime to claim sovereignty over Essequibo, raising fears of a possible annexation attempt.

Allen Good, director of equity research at Morningstar, said Maduro’s assertion over Essequibo was always likely to have been more bluster than it was actionable.

“With Venezuela already in the US’s crosshairs and Exxon the largest operator in Guyana, any aggression would likely have elicited a US response,” Good told CNBC by email.

“Now, with the US’s intent to control the country, any action by Venezuela becomes even more remote, removing a nuisance for Exxon and Guyana,” he added.

Speaking during a press conference alongside Guyanese President Irfaan Ali in March last year, U.S. Secretary of State Marco Rubio warned Venezuela of consequences if it moved to attack Guyana or Exxon Mobil and hinted at the use of military force.

Shortly after the U.S. military operation in Venezuela, Rubio spoke with Guyana’s Ali about strengthening bilateral security cooperation.

In a statement on Jan. 6, Guyanese Foreign Secretary Robert Persaud said Ali reiterated Guyana’s “steadfast commitment to working with the United States – the region’s strategic and important security ally.”

Notably, Persaud said Ali also welcomed Rubio’s “reaffirmation of the US continued support for and partnership with Guyana in defence of our sovereignty and territorial integrity.”

For Verisk’s Gavin, the U.S. military operation in Venezuela appears to have temporarily halted Venezuela’s territorial claims over Essequibo, rather than removed them altogether.

“I don’t think this dispute is going to go away. It’s a longstanding Venezuelan claim [and] the regime is still in place,” Gavin said.

“But, obviously, Caracas is now under intense pressure from the U.S., so I don’t think this is something they will be wanting to be making much noise about in the very near term,” she added.

— CNBC’s Lee Ying Shan contributed to this report.