From Hugo Chavez to Donald Trump: The Tumultuous History of Venezuela's Oil

Venezuela’s vast oil reserves once promised enduring power and prosperity, but decades of political upheaval, mismanagement, and foreign intervention have transformed them into the focal point of a global energy struggle. Holding the world's largest oil reserves, the Latin American country outstrips Saudi Arabia, Russia, and Iran with more than 300 billion barrels in reserves. Yet, production plummeted to just over 1 million barrels per day (bpd) by 2025. Caracas found itself at the center of global oil politics after Nicolas Maduro, who had ruled Venezuela for 12 years, was deposed and extradited to the US. Consequently, the world’s major energy companies are reevaluating Venezuela’s potential as a leading oil exporter, making its rise and decline a stark cautionary tale of politics and hubris.

Decades ago, from the 1960s up to the era of Hugo Chavez, Venezuela experienced a golden age of oil production, peaking at 3.7 million bpd—nearly triple its modern levels. Following initial discoveries, the government intentionally limited production to conserve reserves and prevent field exhaustion. Confidence surged after higher revenues were earned by sitting out the 1973 oil embargo, and production steadily climbed in the mid-1980s, reaching 3.1 million bpd in 1998. The political landscape shifted dramatically during the presidency of Hugo Chavez from 1999 until his death in 2013, characterized by an ideology centered on expelling American influence and competing directly with the US politically and economically. Venezuela had previously nationalized its oil industry in 1976, establishing the state-owned oil company Petroleos de Venezuela SA (PDVSA).

Following the passing of Hugo Chavez, Nicolas Maduro assumed the presidency in 2013 with a narrow 1.6 percentage point margin, inheriting both Chavez's political platform, an oil-dependent economic model, and a deeply discontented population. To force Maduro’s government from power, the US imposed strict sanctions in August 2017, initially blocking financial market access before ultimately halting direct oil trade. Despite this, Venezuelan crude continued flowing to China, which emerged as the primary trading partner taking 40 to 60 percent of exports. Although the Biden administration briefly lifted sanctions in October 2023 for a six-month window to permit limited US trade, a drastic shift occurred when US Special Forces entered Venezuela on January 3 to capture Maduro and his wife, Cilia Flores, on charges of narco-terrorism and conspiracy to import cocaine.

Seven months later, on August 31, the White House unveiled what it termed the “biggest oil deal in world history.” This pact permits the US to extract 65 billion barrels from Venezuela—exceeding 21 percent of its reserves—while North American Blue Energy Partners (Nabep) committed $100 billion toward new oil infrastructure. Because over 90 percent of Venezuelan crude is heavy sour crude, which requires complex processing and trades at lower prices than light sweet crude, it matches the primary import needs of US refineries designed to convert it into cleaner products. With an influx of cheaper crude, US profits from energy exports could rise in the coming years. Ultimately, the US maintains that privatizing and investing in Venezuela’s energy sector serves the Trump administration’s broader strategy for regime change, potentially bringing Venezuela full circle with the return of US oil giants and concluding an era of nationalized production that yielded mixed results for its citizens.