Venezuela’s Stock Just Went Up. The Iran War Makes It More Valuable for Oil Markets.
Anyone remember Venezuela?
The more chaos rages in the Persian Gulf, the better Donald Trump’s last foreign target—and its world-beating oil reserves—looks.
“Any rise in Middle East risk premium makes political change in Venezuela seem more valuable for global oil markets,” says Luisa Palacios, a former chairwoman of Citgo Petroleum now at Columbia University’s Center on Global Energy Policy.
Venezuela’s progress since U.S. forces seized President Nicolás Maduro on Jan. 3 has exceeded skeptics’ expectations. Vice President Delcy Rodriguez steered through an overhaul of the Hydrocarbons Law, swapping state control for more normal production-sharing and royalty structures. An amnesty statute freed more than 3,000 political prisoners, according to the government.
“At the end of last year, 80% of Venezuelans were pessimistic about the future,” says Angel Alvarado, a former opposition lawmaker now at the University of Pennsylvania. “Now, 80% are optimistic. Many of my friends have been released from prison.”
Expanding Venezuela’s current oil production of around one million barrels a day to 1.5 million is “completely doable,” Palacios assesses. The multinationals who have stuck it out in Venezuela—U.S.-based Chevron, Italy’s Eni, and Spain’s Repsol —will lead the charge.
That’s still a long way from the 3.5 million barrels the country pumped in the late 1990s, before Maduro mentor Hugo Chávez took power promising a “Bolivarian Revolution.” Caracas needs deeper structural change to get back on that track, says Benjamin Gedan, director of the Stimson Center’s Latin America program. “There is no rule of law, no court system,” he says.
Chance handed post-Maduro power to Rodriguez, a former economics minister with a reputation as a pragmatist, says Angela Pachon, special adviser to University of Pennsylvania’s Kleinman Center for Energy Policy. “Delcy was previously close to Chevron,” she says.
A more sinister figure lurks behind Rodriguez in interior and justice minister Diosdado Cabello, Pachon notes. He has been under U.S. indictment since 2020 for cocaine trafficking and conspiracy to commit narcoterrorism.
Maria Corina Machado, the Venezuelan opposition leader and Nobel Peace Prize winner, threw an X factor into the country’s politics, announcing on March 1 that she would return home “in a few weeks” to abet an “unstoppable transition to democracy.” Cabello countered that the government would prepare a “surprise” for her.
Also on tenuous ground is Washington’s ad hoc control of Venezuela’s oil revenue, which should rise to $6 billion over “the next few months,” U.S. Energy Secretary Chris Wright said on a visit to the country last month. The U.S. will hold the cash “until a representative government is stood up in Venezuela,” he added.
The Trump administration has been less than forthcoming with further details, Gedan says. “This structure is super nontransparent,” he says. “This is Iran-Contra territory, the executive branch controlling a slush fund.”
Then there is the estimated $130 billion-plus in Venezuelan sovereign debt, in default since 2017. Benchmark bonds took a jump from 31 cents to 45 cents on the dollar following Maduro’s capture, then flatlined for the past six weeks with restructuring talks beyond a far horizon. “I don’t think you will see large-scale investment without settling debt issues,” says Rachel Lyngaas, a senior policy researcher at RAND.
Further disruptions on the other side of the world could offset a lot of misgivings about Venezuela, though. “There’s a completely different equation at $120 a barrel than at $60,” Palacios says.