The effect of the recent U.S. incursion in Venezuela on global oil markets is expected to be limited, as deep structural challenges mean the country is unable to deliver a meaningful increase in crude supply in the near term, analysts at ANZ said in a research note.
Geopolitical risks have re-emerged in the oil market following the capture of Venezuelan President Nicolas Maduro by U.S. forces. The development has renewed attention on Venezuela’s large oil reserves and the long-term prospects of its struggling energy sector.
However, ANZ noted that Venezuela’s oil industry has been severely weakened by years of mismanagement, chronic underinvestment, and international sanctions. These factors have significantly reduced the country’s ability to influence global oil supply and demand balances.
Under the most optimistic scenario — which ANZ views as unlikely — a smooth political transition could lead to a rapid easing of U.S. sanctions. This could allow Venezuelan oil exports to increase by more than 200,000 barrels per day, moving closer to pre-embargo levels of around 900,000 barrels per day.
Even in this best-case outcome, the bank said the additional supply would remain modest relative to the size of the global oil market and would likely place only limited downward pressure on crude prices.
ANZ believes a more realistic outcome is a period of heightened political instability, which would keep the risk of supply disruptions elevated in the short term rather than lead to a swift production recovery.
Venezuela’s oil output has already fallen sharply, dropping from about 2.3 million barrels per day in 2015 as investment collapsed and infrastructure deteriorated. Recent spending levels remain well below what is needed even to maintain current production, according to the analysts.
Any meaningful recovery in output would require substantial capital investment and long development timelines, ANZ said, making a significant production rebound unlikely before the end of the decade, even under favorable political conditions.
The bank added that previous U.S. interventions in oil-producing nations have typically resulted in temporary supply disruptions rather than rapid increases in production. As a result, Venezuela’s situation is more likely to support a short-term geopolitical risk premium in oil prices than trigger a lasting shift in global supply dynamics.
