As geopolitical tensions rise following the recent U.S. military operations in Venezuela, many are asking if this "regime change" will provide a windfall for the American energy sector or a relief at the pump. The short answer: Absolutely not.
Despite the bold rhetoric coming from the administration regarding the "rebuilding" of Venezuela's oil infrastructure, the reality on the ground—and in the global market—is far more complex.
The Drop in the Global Bucket
Venezuela’s current export level sits at roughly half a million barrels a day. To put that in perspective, that is only 0.5% of the global oil market. Most of this supply is already tied up, flowing either to Cuba or to China, which has been financing the Venezuelan oil patch for over a decade.
While President Trump recently met with the Saudi leadership to discuss potential disruptions, the math doesn't necessitate panic. The Saudis maintain approximately 2 million barrels a day of spare capacity. They are more than capable of filling any void left by a Venezuelan interruption. In fact, despite the weekend's military action, oil prices actually trended downward this morning.
The "Failed State" Precedent
The history of U.S. intervention to secure oil is a history of disappointment. We’ve seen this script before:
Libya: An intervention that ended in a failed state and a permanent drop in production.
Iraq: Despite claims that the U.S. would "get the oil," the venture has not turned out well for any party involved.
Russia (1989): After the fall of the Soviet Union, U.S. service companies were encouraged to enter the market, only to have their assets eventually expropriated by the Russian government.
Venezuela is no different. Exxon has already had its assets appropriated twice. Chevron remains the only major U.S. player left, operating under a production-sharing arrangement with the state-owned PDVSA—a legal minefield that no other CEO is currently rushing to join.
The Domestic Squeeze
Perhaps the biggest reason U.S. companies won't be rushing into Caracas is that they are struggling at home. Under the current administration’s trade policies, the American oil producer is getting squeezed:
Price Collapse: Oil has dropped from over $80/barrel last year to less than $60 today.
Tariff Costs: Steel tariffs have driven drilling costs up by 5% to 12% per well.
With capital tied up and the domestic economics looking grim, an "expedition" to rebuild a shattered foreign industry is a non-starter for most boards. Rebuilding Venezuela would require billions of dollars and three to four years of stability—a timeline that extends well beyond the current political cycle.
A Shift in Policy?
The administration’s move marks a sharp pivot from the "no foreign entanglements" and "no nation-building" promises that defined the Trump team's initial platform. While Secretary of State Marco Rubio has been vocal about the administration’s intent to manage the transition, it’s worth noting that his predecessor—and former oil man—Rex Tillerson likely wouldn't have pursued this path.
The U.S. may have removed the leadership, but in a country where the oil industry is in shambles and the political rhetoric is high, "running" Venezuela may prove to be a much costlier entanglement than anticipated.