Venezuela’s Oil Paradox: Political Decline, Foreign Intervention, and the Dangers of Fossil Fuel Revival

Written by: Kéa Anderson

Edited by: Sunny Bell

The Venezuelan oil industry stands at a crossroads. What was once the nation’s most prosperous enterprise now struggles in the aftermath of decades of political mismanagement, infrastructure decline, and escalating geopolitical conflict. Recent U.S. sanctions, foreign involvement, and domestic turmoil raise questions about the viability and practicality of Venezuela’s vast oil reserves and production industry. Meanwhile, efforts to scale up extraction have been anything but discreet. At a critical turning point for securing international commitments to fossil fuel reductions, a jump-start to Venezuela’s extraction economy may have severe implications for global carbon emissions targets and climate change goals.

Venezuela began commercial oil production in 1922, after the eruption of the Barroso II mine caused a nine-day, high-scale crude oil spill that established the country as a major global oil power (Sulbarán, 2021). By 1929, production had taken off, rising from 2 million to over 100 million barrels of oil per year, and Venezuela ranked in the top oil producing countries in the world, second only to the United States (Alberto, 2026). The transition from an agriculture-based economy to a global resource bank represented a significant turning point in the nation’s economic goals. In 1976, Venezuela nationalized its oil industry under the state-owned Petróleos de Venezuela S.A. (PDVSA), but by then, the industry’s infrastructure, expertise, and commercial exports had been critically tied to the U.S. (Ponce, 2026). This foundational dependence on production facilities and market influence was key in the future U.S. control and manipulation of the industry.

The nature of Venezuela’s crude oil reserves causes the negative environmental impact of production to far surpass that of other nations. Oil from Venezuela’s Orinoco Belt is extra heavy, with a texture akin to molasses, as opposed to the thin, watery consistency of typical U.S. shale (McKenzie, 2026). This viscous oil requires more expensive and carbon-intensive infrastructure to refine, making its relative emissions much higher and more dangerous on a global front. While the demand for heavy and extra heavy oil remains high, given its primary use for diesel fuels or asphalt production, the amount of carbon and methane pollutants released in its production and use has forced many countries to think twice about increasing their imports and consumption (McKenzie, 2026).

While Venezuela’s oil industry experienced fluctuations over the mid to late 20th century, the policies implemented under the government of Hugo Chávez in 1999 initiated the dramatic decline in production, export, and the oil economy as a whole. Several structural economic hurdles hindered the oil sector in the early 2000s, leaving it struggling and vulnerable to intensified U.S. sanctions in the early Trump Administration. A government restructuring of the PDVSA in 2002 saw thousands of Venezuelan oil workers fired, weakening the industry’s operational and management capacity (Ponce, 2026). During this time, leaders of the industry used Venezuelan oil as an instrument of foreign policy and political negotiation. Major expropriations of oil projects from foreign companies, namely ConocoPhillips and ExxonMobil, backfired on Venezuela when the international disputes were settled in favor of the oil companies and against the national government (Ponce, 2026). Persistent debts, lack of investment, absence of expertise, and a crash in global oil prices turned the previously prosperous tide of crude oil production. By 2015, oil production averaged 2.7 million barrels of oil per day, and by 2020 this number tanked to 569,000 (Bruce, 2026). With oil being the major contributor to the Venezuelan GDP, the economy subsequently collapsed.

In the midst of the collapse of the Venezuelan oil sector, foreign interventions steered the country closer to crisis. Under the first Trump Administration in 2017, the U.S. placed sanctions on Venezuelan oil companies, most detrimentally on PDVSA - measures that effectively cut the country off from U.S. financial systems and deterred foreign investment (Wolfe, 2026). With the decline in production came a more severe decline in export capacity, and Venezuela fell deeper into economic collapse. Fuel shortages and mass poverty swept through the nation, becoming a central feature of social life in the 21st century. A further examination of economic, social, and cultural rights in the aftermath of Venezuela’s oil collapse prompted a large-scale environmental evaluation, inviting questions about individuals’ rights to a healthy climate (Ponce, 2026).

By 2025, U.S. policy shifted dramatically with Trump’s order for a maritime blockade and seizure of tanker vessels - actions framed as sanctions enforcement but widely criticized as unnecessarily aggressive and potentially unlawful (Alberto, 2026). Venezuela continues to export minimally, primarily through discounted crude sales to U.S. refineries, but the distrust of foreign interventions and sanctions constitutes a large barrier for the industry. One week into 2026, Trump’s capture of current Venezuelan president Maduro and plans to assume control of the country’s declining oil industry suggest that the history of U.S. involvement will only prevail. Trump has asserted that with billions of dollars of spending and bold interventions, U.S. oil companies will rebuild Venezuela’s oil infrastructure and allow the industry to “start making money” (Wolfe, 2026). A clear projection of Trump’s “drill, baby, drill” policies for dominating energy production, this recent foreign policy move reflects the administration’s disregard for environmental concerns, harmful fossil fuel emissions, and international climate change prevention goals.

These recent events invite high-profile global scrutiny, with a bigger-picture concern for the implications of a revived oil production industry in the age of fossil fuel phase-outs. Venezuela has the largest known oil reserves in the world beneath its soil, but the amount of energy, infrastructure, and emissions required to extract and process this crude oil would be immense. A full revival of the industry, as President Trump envisions, would likely undermine global efforts to reduce global warming and remain beneath the Paris Agreement target of 1.5°C above pre-industrial levels. Furthermore, a jump-start to the global oil economy, increasing stock and decreasing prices, could detrimentally delay the transition to renewable energy. Subversion of this nature is evidently not out of the question for the current U.S. administration, but barriers to this revival plan remain. Trump’s intention to reignite the industry depends largely on successful restructuring of infrastructure, stabilizing domestic governance, resolving lingering disputes with oil companies, and securing trained personnel to execute the recovery. Given Venezuela’s history of social and political tensions, financial turmoil, and a widespread distrust of foreign involvement, uncertainty surrounding this future may predominate.

Any large-scale resurgence of Venezuelan oil production carries implications that extend well beyond national borders. The country’s extra-heavy crude reserves demand energy-intensive extraction and refining processes that threaten to emit disproportionately high amounts of greenhouse gases. In a global context increasingly defined by climate commitments and decarbonization targets, expanded production in Venezuela’s Orinoco Belt would hinder efforts to limit global temperature rise and meet international emissions reduction goals. These substantial environmental costs raise critical questions about the long-term viability and responsibility of pursuing fossil fuel expansion at a time when many nations are attempting to transition away from fossil fuels in favor of renewable energy sources. At the same time, the collapse of Venezuela’s oil industry has had severe social consequences, and its economic dependence on oil exports has not changed. While there is no assurance that Trump’s intended policies, should they come to fruition, would benefit the Venezuelan economy or the larger, dependent population, the country faces no powerful alternatives. Ultimately, the future of Venezuela’s oil sector will be dependent not only on political stability and foreign involvement, but on whether production decisions align with ever-evolving global energy demands. With increasingly critical international attention, Venezuela acts as an example of the inherent tensions between economic recovery and environmental responsibility.

References

Alberto, L. (2026, January 12). Con tinta de petróleo se escribió la historia entre Estados Unidos y Venezuela. El Nacional. https://www.elnacional.com/2026/01/con-tinta-de-petroleo-se-escribio-la-historia-entre-estados-unidos-y-venezuela/

Bruce, G. (2026, January 7). 6 charts that tell the story of Venezuela’s struggling oil economy. CBC. https://www.cbc.ca/news/world/charts-venezuela-oil-economy-9.7036544

McKenzie, J. (2026, January 6). Why reviving Venezuela’s oil industry will prove to be a tall order for Trump. Bulletin of the Atomic Scientists. https://thebulletin.org/2026/01/why-reviving-venezuelas-oil-industry-will-prove-to-be-a-tall-order-for-trump/amp/?gad_source=1&gad_campaignid=22829880916&gbraid=0AAAAAC3qOh8GJ-n-yTlknosRdLzKW_OTF&gclid=Cj0KCQiAg63LBhDtARIsAJygHZ6UfuByziUBvtdXiMOYwv8-QzGFjGqYcYT0tedSwGV0xTTbrrEmWSUaAvo1EALw_wcB

Ponce, J. C. (2026, January 9). Five keys to understanding Venezuela’s oil history. Yale Climate Connections. https://yaleclimateconnections.org/2026/01/five-keys-to-understanding-venezuelas-oil-history/

Sulbarán, R. D. (2021). El Barroso. ReVista. https://revista.drclas.harvard.edu/el-barroso/

Wolfe, J. (2026, January 9). Venezuela’s Oil Industry: A Timeline of Key Events. The New York Times. https://www.nytimes.com/2026/01/09/business/venezuela-oil-industry-timeline-trump.html