The near-term outlook for Venezuela's oil production is highly uncertain following the US capture of President Nicolas Maduro on 3 January, Goldman Sachs and UBS said in separate reports. Both banks agree that any significant increase would be gradual and require substantial investment.
Following Maduro's capture, US president Donald Trump said Washington would temporarily run the country and overhaul its oil sector, although US secretary of state Marco Rubio has since clarified that the US will seek to influence Caracas' policy decisions rather than take over the administration. The US will maintain its "oil blockade" against Venezuela to maintain leverage, Rubio said.
Ice Brent crude futures were broadly unchanged at just under $61/bl in early London trading, showing little reaction so far to events in Venezuela.
Goldman said any short-term impact on Venezuela's crude output would hinge on US sanctions policy aimed at squeezing its exports. Production was 934,000 b/d in November, according to an average of Opec secondary sources including Argus.
Goldman estimates a 400,000 b/d increase by year-end could push Brent lower by $2/bl to average $58/bl in 2026. A similar decline would have the opposite effect.
UBS does not expect Venezuela to significantly affect global oil market balances in the next 12 months, but says output could rise modestly towards pre-embargo levels if US restrictions ease. The US imposed an oil blockade in December and began seizing tankers carrying Venezuelan crude to curb its revenues. The impact remains unclear.
Venezuela's oil exports are difficult to track as the country uses tactics to obscure shipments and evade sanctions. Data analytics firm Kpler puts December exports at 827,000 b/d, up 52,000 b/d on November. In contrast, ship tracker Vortexa saw a 282,000 b/d fall to 556,000 b/d.
The longer-term outlook for Venezuelan crude output will largely depend on the political transition after Maduro, who now faces a number of criminal charges in the US including conspiracy to commit narco-terrorism and import cocaine. Venezuela produced around 3mn b/d in the early 2000s before a nationalisation programme, mismanagement and sanctions led to a collapse in output.
Even in a scenario where western oil firms return to the country in earnest, significant output gains would take time and investment. Venezuela holds the world's largest proven reserves, but its extra-heavy crude is costly and complex to extract.
"Higher recovery rates of heavy Venezuela oil will likely require financial and time-investments in oil-processing upgraders and improvements in operational efficiency, power availability, and oil transporting infrastructure," Goldman said.
