How U.S. Control of Venezuelan Oil Could Redefine the World Order
The Trump Administration’s recent actions in Venezuela have triggered intense debate about sovereignty, international law, and the legal limits of American power. Yet beneath the political tumult lies a set of energy and economic dynamics that have profound implications for global energy markets and the existing multipolar world order.
The Administration has framed its Venezuela strategy around historical grievances—particularly the 50-year-old confiscation of U.S. oil assets. President Trump has indicated that he plans to reintroduce American oil companies to Venezuelan oil field operations, potentially with federal support. If implemented effectively, U.S. control of Venezuela’s oil could fundamentally alter the global landscape with significant implications for long-standing U.S. policy priorities.
Reduction in OPEC’s Market Power
Venezuela’s role in global oil markets has been constrained by sanctions and production declines in recent years, but its underlying petroleum resource base remains formidable. As a founding OPEC member, Venezuela holds approximately 20-30% of global reserves—a significant potential source of supply. If U.S. interests gain operational control over Venezuelan production decisions, OPEC’s ability to manage global oil prices through production quotas would be counterbalanced by U.S. drilling decisions. As OPEC members try to reduce their production quotas to support higher prices, Venezuelan oil production under the control of the U.S. could offset those reductions, thereby limiting the cartel’s market power.
Whether oil companies will commit the substantial capital required to restore Venezuelan infrastructure in the face of significant risks remains uncertain. Reviving production capacity requires billions in investment to rehabilitate aged facilities and dismantled supply chains. American efficiency and know-how could tackle this challenge cost-effectively under current market prices for oil, especially if the federal government offers favorable terms and risk mitigation such as loan guarantees, tax incentives, contractual protections, and/or military protection.
Lower Energy Costs
Control over Venezuelan oil output also has direct implications for U.S. energy costs. Venezuela produces heavy, sour crude—exactly what U.S. refining infrastructure is designed to process. Increased access to this feedstock at favorable terms could reduce input costs of production for American refineries, potentially lowering gasoline prices for American consumers.
Lower energy prices ripple through the broader economy, especially the transportation sector. If sustained, meaningful reductions in fuel prices could ease some of the inflationary pressures that have created challenges over the past few years. Even modest price reductions would offer inflationary relief and contribute to economic recovery.
Impact on U.S. Adversaries
Lower oil prices benefit consumers but would stress nations that are heavily dependent on energy export revenues. Russia, Iran, and other countries that rely on oil revenues to fund government operations face budgetary pressure when energy prices decline. Combined with existing sanctions, lower oil prices generated by U.S. oil production in Venezuela could force difficult choices about government spending and stress economic conditions, toppling the economies and regimes of long-standing American adversaries.
Leverage over China
Controlling Venezuela’s oil fields also increases U.S. leverage over China. In recent years, China has become Venezuela’s primary oil buyer (estimates indicate 80% of Venezuela’s sales). China also has been accepting crude oil as repayment for billions in outstanding loans. These arrangements, sometimes conducted through intermediaries to navigate sanctions, represent both an energy trade relationship and a financial claim.
U.S. control over Venezuelan oil production and export channels could disrupt these existing arrangements. Redirecting oil flows away from China, while maintaining Venezuelan government control under U.S. influence, could place Chinese loans in technical default without practical collection mechanisms. Beyond the immediate financial implications, such a scenario reasserts U.S. influence in the Western Hemisphere and challenges China’s expanding economic presence in Latin America.
Energy Independence
American energy independence has been the holy grail of energy policy on both sides of the aisle. The phrase “energy independence” often obscures the complexity of U.S. energy markets. America produces substantial volumes of light, sweet crude, but domestic refineries typically are configured to process heavier, sour crude imports. As a result, increased U.S. crude production does not automatically generate energy independence if U.S. refineries still need to rely on imports from global markets.
Venezuelan crude is sour, heavy and complex, but matches America’s unique refining capabilities. If U.S. companies gain access to Venezuelan production, the means of ensuring energy independence shifts significantly. Securing reliable access to refinery-compatible crude from a Western Hemisphere source could significantly reduce U.S. dependence on Middle Eastern and other volatile sources of supply. In theory, energy independence could be in reach if U.S. companies can increase production from Venezuela and control their upstream refinery supply chain. In practice, that independence would be more reliant on a single country outside of the U.S.
Reserve Currency Status
Most oil trades are denominated in U.S. dollars. The U.S. dollar serves as the primary global reserve currency, providing substantial economic advantages. However, the strength of the dollar has been declining and reserves held in U.S. dollars have fallen over the past fifty years. Under Maduro, Venezuela had attempted to shift oil sales away from dollar denominations toward yuan, euros, and other currencies. His 2017 decree to do so was part of a broader trend among U.S. adversaries that wish to diversify away from dependence on the currency of the existing superpower.
American oil companies operating Venezuelan fields would continue to conduct their transactions in U.S. dollars, reinforcing dollar dominance in global energy markets. While Venezuela represents just one country, maintaining dollar centrality in oil trades help to preserve the currency’s broader reserve status and the “exorbitant privilege” that it provides.
Implications for the World Order
The post-World War II international order rests on principles of sovereign equality, multilateral institutions, and rules-based frameworks for resolving disputes. OPEC itself emerged from this system, as did international oil markets governed by contracts and customary practices under the current rule of law. The Venezuela situation raises serious questions about these existing norms and represents a departure from decades of international practice regarding respecting sovereign territories and private control over energy investments.
Converging Policy Objectives
The Venezuela energy play, if successfully implemented, could influence OPEC pricing power, reduce domestic energy costs, topple adversaries, counter Chinese influence, advance energy security, support dollar dominance, and reshape international norms—all through control of a single country’s oil sector. Whether these potential benefits materialize depends on numerous factors: the willingness of oil companies to invest despite risks, the stability of the existing or new Venezuelan government, international reactions and responses, plus the operational challenges of reviving Venezuelan oil production by foreign companies. Geopolitical and ethical questions surrounding sovereignty and intervention will continue to generate debate.
What remains clear is that control of energy resources continues to drive economic power and geopolitical influence. Control over significant oil reserves still shapes global dynamics. Nations that secure control gain leverage across multiple dimensions of international relations and public policy. From this perspective, the Venezuela situation has dramatic implications for global energy trade, the changing world order, and the role of the U.S. in both.
To discuss these topics and how StoneTurn can help, reach out to Tanya Bodell or Kristofer Buchan.
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