What Does Trump’s Venezuelan Invasion Mean for US Oil?

Not even a week into 2026 and Prez. DJT decided, “You know what, we need Venezuela’s oil to make 2026 a really yuuuge year for America! So, DJT invaded the South American nation to lay claim to the country’s oil reserves while also ousting and capturing a dictator (and his wife).

Now granted, Trump didn’t say that explicitly, but he did tell the world that, “We’re going to have our very large United States oil companies, the biggest anywhere in the world, go in” and help run the country.

Some will see this as America exerting its rights; some will see the opposite of that.

I see a different story—a story about oil and the impacts on the US oil industry in 2026 and beyond…

First, a few facts:

• Venezuela holds the world’s largest reserves of untapped oil—more than 300 billion barrels or so, or about 17% of known global supplies, far outstripping the Saudis with about 267 billion barrels of known reserves.
• US oil companies once had a big presence in Venezuela before the dictatorial whims of formerly alive and now dead Hugo Chavez nationalized US oil assets in 2007.
• Venezuelan oil is crappy oil. It’s still oil, sure, but it’s low-quality, extra-heavy, and sour, as opposed to so-called “light, sweet crude” that flows from most US wells. Heavy oil is primarily used to produce asphalt and diesel, and for heating buildings and generating electricity. Heavy oil can turn into gasoline, but the added processing costs mean it’s more expensive than producing gasoline from light, sweet crude… so refiners pay $10 to more than $30 lower per barrel of heavy oil vs sweet crude.
• At the moment, Venezuela, despite its embarrassment of oil, represents just 1% of global production because the local industry is managed about as well as a cat manages a barbeque pit. If it moves back to peak production, Venezuela would represent about 3% of global production.

Now, let’s look ahead to what all of this means to oil prices globally and the impacts on the US oil sector.

The oil market globally has initially responded to Trump’s invasion of Venezuela by sending oil prices lower, temporarily. But as I write this on Monday afternoon from Portugal, West Texas Intermediate, the benchmark US oil price, has rebounded nearly 3% off the bottom.

The “why” reflects those facts above. Again, Venezuelan oil is crappy oil—in industry terms—and the local industry functions poorly because of underinvestment, sanctions, and infrastructure decay over the last couple of decades.

So, any expectation of sharply lower oil prices because of Venezuela’s vast reserves is overblown. Whatever US/Western oil companies move back into Venezuela will need five to, possibly, 10 years to bring local infrastructure up to modern needs.

Optimistically, Venezuela’s Orinoco Belt might—might—be able to potentially add 500,000 barrels to global production later this year. But that’s assuming a stable government and that oil companies dive into the country.

None of that is certain, particularly the idea of oil companies diving into Venezuela.

Oil is a boom-bust business. And oil companies, after living through so many examples of busts over the last 40 years, are not eager to ramp up Venezuelan production quickly because they know that doing so will drive the price lower… which just hurts their profits and leads to layoffs and bankruptcies.

These days, they’re far more focused on “capital discipline,” meaning avoiding overproduction that could crash prices yet again.

Which explains this reporting from Politico last month:

The Trump administration is asking U.S. oil companies if they’re interested in returning to Venezuela once leader Nicolás Maduro is gone, four people familiar with the discussions told POLITICO.

And so far, the answer is a hard “no.”

Current oil prices, Politico noted, are “way too low to entice companies to take the risk of pouring huge investments into the crumbling Venezuelan oil facilities that former strongman Hugo Chávez seized decades ago, industry officials and analysts said.”

Or this, per The Wall Street Journal, as of Monday, the day after the invasion:

Global oil-market balances are unlikely to be significantly affected by U.S. actions in Venezuela over the next year, says Giovanni Staunovo of UBS. “Any recovery in production would require substantial investment given the neglected infrastructure resulting from years of mismanagement and underinvestment,” the strategist says. “It remains unclear which companies would be willing to invest in Venezuela at current oil prices, especially amid ongoing political, security and legal uncertainties.”

Where all of this leaves the US oil industry depends in part on what corner of the industry we’re talking about, and how OPEC+ reacts.

OPEC+ is basically a group of oil producers (Organization of the Petroleum Exporting Countries) and a few tagalongs like Russia, who banded together in 2016 to stop US shale from crashing oil prices by pumping too much crude into the market.

Most of the countries in that grouping care little about the US; some are openly hostile toward DC. No surprise, then, if OPEC+ decides to cut production in 2026 to offset any increase in Venezuelan production. Not saying they will… but don’t color me shocked if they do.

Venezuela is a founding member of OPEC, which brings about another question: Will it remain a member under US administration? Maybe. Maybe not. At this point, who knows?

If OPEC+ doesn’t cut production, and if Venezuela manages to increase their own production this year, then oil prices will trend lower over 2026, which will squeeze profits margins in America’s shale-oil industry.

Shale-oil producers are already struggling with fallen oil prices, and sustained prices below $60 per barrel will see those companies defer investment in finding new reserves and likely lead to layoffs and bankruptcies in the oil patch. (The Saudis, by the way, love to squeeze US shale producers into bankruptcy, so OPEC could very well decide to let prices fall for a while.)

US refiners, however, particularly those along the Gulf Coast, will be winners. Their proximity to Venezuela is a benefit, as is the fact that their refineries are optimized for processing heavy, sour crude that flows in daily from Canada, Mexico, Colombia, Brazil, and the Middle East. They could see profit margins expand if more crude begins to flow out of Venezuela this year.

So, I guess the takeaway is this: If you see oil prices slump sharply because of news out of Venezuela over the coming weeks, you might want to use that opportunity to snap up Big Oil stocks like ExxonMobil, Chevron, and ConocoPhillips.

I’d also be watching for opportunities among refiners with a big presence along the Gulf Coast, such as Marathon Petroleum, which operates heavy-crude refineries along the Louisiana and Texas coasts, and which was a major refiner of Venezuelan crude back in the day.

To be clear, I am not necessarily recommending those stocks. I am simply sharing with you examples of the kinds of companies you want to be looking at should oil prices come down.

Because the real point is this: Whatever price drop happens in oil will be temporary and will represent an opportunity to position yourself for the inevitable rebound to come.