Trumps Venezuela Gambit Could Upend Global Oil Markets and Sink Russia

The presence of the American fleet in the Caribbean signals a major shift in geopolitical tension. Led by the USS Gerald Ford, the world’s most powerful aircraft carrier, the United States Navy stands ready near the Venezuelan coastline. President Trump has made it clear that he seeks to dismantle the drug cartels that operate from Venezuela, with a willingness to consider more significant actions, potentially including a move against the regime of Nicolas Maduro.

Recent developments have heightened uncertainty. Congress has opted not to invoke the War Powers Resolution, granting the American president broad latitude of action. While a full-scale invasion is not widely anticipated, the potential for US sea and air power to assist Venezuelan opposition groups is strong. This could expedite the fall of Maduro’s regime and pave the way for new leadership.

María Corina Machado, this year’s Nobel Peace Prize laureate and a prominent opposition leader, continues to advocate democratic change despite remaining in hiding for her safety. She has declared support for President Trump’s interventionist stance. If US support helps install a new government, Venezuela may finally enter a period of political stability and recovery after years of misrule and economic collapse.

The implications for the world economy are profound. Venezuela holds the largest proven oil reserves globally, estimated at 303 billion barrels, surpassing Saudi Arabia and Iran. Despite this abundance, Venezuela’s oil exports have dwindled to negligible levels, thanks to decades of mismanagement, corruption, and international sanctions. In contrast, Saudi Arabia exports oil worth over 180 billion US dollars annually and Russia surpasses 120 billion dollars, while Venezuela remains sidelined with just 4 billion dollars of oil exports per year.

A change of government supported by Washington would almost certainly revive the oil sector. Restoring oil production to historic levels, or even surpassing them, could be achieved quickly with sufficient investment and Western technical expertise. Venezuela once produced three million barrels of oil each day and, given the will and resources, could reach similar output in a relatively short period.

The effect on global oil prices could be dramatic. The current barrel price is already historically low, hovering near 60 US dollars. A surge of Venezuelan crude on the world market would likely depress prices below 50 US dollars, quite likely as low as 30, with sustained pressure keeping them low for the remainder of the decade. Such a scenario would have enormous consequences for major oil exporters.

Russia, already faced with the ongoing costs of the war in Ukraine, would struggle to finance its commitments with oil profits potentially slashed. The Kremlin is aware of the geopolitical ramifications, as evidenced by Vladimir Putin’s willingness to offer military assistance to the Maduro regime. Saudi Arabia, with its sizable budget deficits, would feel the squeeze as energy revenues fall. On the other hand, global consumers would benefit through reduced inflation and lower energy costs, which could free up disposable income for other sectors. Renewable energy technologies may appear less attractive financially when fossil fuel prices are so low.

The coming weeks will be decisive. Should the United States act decisively in Venezuela, the repercussions could reshape markets and balances of power for years to come, presenting one of the most significant economic and geopolitical shifts of the decade.