The Trump administration has stated it has had no discussions with US oil majors about Venezuelan oil, either before or after the attacks and capture of Maduro, although talks are planned for later this week. This claim has been met with scepticism.

There has been much excitement about Venezuela’s vast oil reserves, but these figures are largely misleading. Here is a concise explanation from renowned oil investor John Arnold:

– JPMorgan claims Venezuela holds the largest oil reserves.
– This figure originates from an OPEC report.
– OPEC data relies on self-reporting by member countries.
– Venezuela’s figures come from PDVSA, the state oil company.
– PDVSA reports inflated reserves following Hugo Chavez’s directive years ago, intended to enhance prestige; reducing these figures now would be politically damaging.

Goldman Sachs has released a note attempting to clarify the current situation amid the chaos. The key message is that while the situation is complex, if the US manages to restore Venezuelan oil production, it could exert downward pressure on prices in the future.

Key points from Goldman Sachs’ note include:

– President Trump announced intentions to “get the oil flowing the way it should be,” yet the embargo on Venezuelan oil remains fully in place for now.
– Venezuela’s oil production was 0.93 million barrels per day (mb/d) in November 2025, but Goldman suspects this has recently fallen to approximately 0.8 mb/d due to production shutdowns and storage constraints.
– Global imports of Venezuelan crude have dropped by about 0.4 mb/d year-on-year.

Goldman Sachs outlines two main scenarios for WTI and Brent crude prices through 2026:

1. Bearish Case (Production Rises): If a US-supported government takes control, oil wells are repaired, and the embargo is lifted, production could increase by 0.4 mb/d. This scenario would see Brent and WTI prices at $54 and $50 per barrel respectively in 2026, which is $2 below Goldman’s base case.

2. Bullish Case (Disruption Continues): If Maduro’s administration remains in power or infrastructure deteriorates further, production could fall by 0.4 mb/d. This would push Brent and WTI prices to $58 and $54 per barrel respectively, $2 above the base case.

Looking further ahead, Goldman Sachs views Venezuela’s oil potential as a long-term negative for prices. Despite having the world’s largest proven reserves, the country’s oil infrastructure is severely damaged. Significant time and investment are needed to repair upgraders, power supply, and transportation systems.

Goldman estimates that if Venezuela can increase production to 2 mb/d by 2030, this could reduce their 2030 Brent forecast of $80 per barrel by $4.

It is important to remember that Venezuela’s peak production was around 3 mb/d in the mid-2000s, but any recovery now will likely be slow and partial due to degraded infrastructure and the need for strong incentives for upstream investment. Improving heavy Venezuelan oil recovery requires financial and time investments in processing facilities, operational efficiencies, power availability, and transportation infrastructure.

Given these challenges, a rapid boost in production is unlikely. Furthermore, an increase of 1.1 mb/d represents only about 1% of the global oil market, which consumes around 105 mb/d.

Original Source: Adam Button of investinglive.com