Trump’s Venezuelan Dilemma: Military Victory, Economic Quagmire

President Trump's military raid that removed Venezuelan leader Nicolás Maduro may have been tactically impressive, but his promise of billions from a Venezuelan oil bonanza faces harsh economic realities: the nation's oil industry, despite sitting atop the world's largest proven reserves, has collapsed from 3.5 million to 1 million barrels per day after decades of mismanagement, with crumbling infrastructure that hasn't been updated in 50 years. Technically challenging tar-like heavy crude, Venezuelan oil is expensive to extract and refine, and major oil companies show little enthusiasm for investing given they're still owed billions from previous nationalizations and face better opportunities elsewhere like Guyana.

photo by Maria Lupan

The political chaos following the raid compounds the economic obstacles. While Maduro's cabal still runs the country, and regional allies have condemned the operation, Trump continues to make ambiguous statements about the United States “running” Venezuela. Low oil prices—currently below $60 per barrel—driven by a global oil glut, further complicates the picture. Venezuelan crude will require significantly higher prices to break even. Taken together, these factors suggest that reviving Venezuela's oil sector would realistically require over $100 billion in investment and at least a decade of work, assuming a level a political stability that does not currently exist, and a degree of corporate confidence that two rounds of nationalizations have thoroughly destroyed.

Trump summoned executives from the major companies to the White House to assess their appetite for pumping more Venezuelan oil, and the prospect of taxpayer guarantees has been raised, an idea sure to be unpopular with voters. Moreover, his vow that America and Venezuela stand to gain billions from a bonanza sparked by his daring raid on the oil-rich nation now must pass an equally challenging test: economic reality.

ExxonMobil CEO: Venezuelan Oil “Uninvestable”

Even though the Latin American country sits on a formidable oil reserve, a critical distinction exists between having oil and the ability to extract and profit from it. Getting that Venezuelan oil out of the ground and into gas tanks will require significant investment and time and will no doubt test the patience of an American public skeptical of long-term foreign entanglements.

There’s no question that America pulled off a spectacular raid when U.S. troops descended upon Venezuela and whisked Nicolás Maduro, the corrupt Venezuelan leader, and his wife, Cilla Flores, to a New York jail cell. President Trump is entitled to brag about the skill and dexterity of the U.S. troops who carried out the raid.

But his statements that America’s big oil companies were “ready to go” and invest the sizable resources needed to revive an industry suffering from decades of neglect and mismanagement appear premature. Indeed, major oil companies with the skills and expertise to reverse the mismanagement and neglect suffered under the governments of Maduro and his mentor, Hugo Chavez, were noticeably restrained in their reactions to Trump’s call to arms.

ConocoPhillips told a Florida broadcast outlet that it is “monitoring developments,” adding that it’s “premature to speculate on any future business activities or investments.” ExxonMobil’s CEO Darren Woods bluntly said Venezuela was  “uninvestable” after meeting with Trump. Woods added that ExxonMobil was prepared "to put a team on the ground" to assess the current state of Venezuela's oil industry, provided it received security guarantees and an invitation from the Venezuelan government. But he made no commitment to actual investment.

Political Chaos a Major Concern

Chevron, the only U.S. oil company operating in Venezuela, issued a carefully worded statement saying that it “remains focused on the safety and well-being of our employees as well as the integrity of our assets” and that it continues to “operate in full compliance with all relevant laws and regulations.” The company said it could increase its production by 50 percent in two years, but it and none of the companies committed to new investments. Although some smaller companies indicated an interest in the Venezuelan oil concession, the American Petroleum Institute, the industry’s trade association, issued a similarly vague statement, saying that companies make investment decisions based on stability, the rule of law, and market forces.

The tepid corporate response reflects a sobering calculation: rejuvenating Venezuela’s oil industry ranks among the most challenging oil investments globally. Technical complexity, political uncertainty, fragile market conditions, ambiguous timelines, and historical grievances make it difficult to commit the sizable investments needed to turn things around. The industry is in shambles.

Indeed, even after President Trump announced that Venezuelan authorities would deliver between 30 and 50 million barrels to the U.S. under extremely favorable conditions, industry sources told CNN that major companies remain reluctant to reenter Venezuela’s already fragile markets. The acquisition of the oil would give Petróleos de Venezuela, S.A. (PDVSA), the Venezuelan state oil company, a shot in the arm since its current inventories are close to full. Still, some traders have questioned what strings America will attach to the purchases announced by Trump.  “Just because there are oil reserves, even the largest in the world, doesn’t necessarily mean you’re going to produce there,” an industry source told CNN. “This isn’t like standing up a food truck operation.”

Trump: U.S. to “Run” Venezuela

Francisco Monaldi, director of the Latin America Energy Program at Rice University and a leading expert on Venezuelan oil, told the PBS NewsHour that the issues extend beyond infrastructure decay. “How do you get foreign companies,” he asks, “to start pouring money in before they have a clear perspective on the political stability, the contract situation, and the like?” Monaldi says it would take at least a decade and more than $100 billion in investment to increase production to the nation’s potential.

The major concern currently on everyone’s radar is the persistent political instability and Trump’s ambiguous statements that the U.S. will “run” Venezuela. As expected, China and Russia condemned the operation, as did U.N. Secretary-General António Guterres. Latin American neighbors such as Colombia, Brazil, Mexico, and Chile said the operation violated international law, although right-leaning governments such as Argentina and El Salvador welcomed Trump's action. Moreover, in the wake of the raid, Trump has fanned the flames, suggesting that the U.S. may pursue additional acquisitions, including the seizure of Greenland, an autonomous territory within the NATO member state of Denmark. Danish and Greenland officials emphatically rejected Trump’s goals.

Venezuela is the tip of the spear in the Trump administration’s goal of reasserting dominance in the Western Hemisphere, as part of a recalibration of America’s foreign policy that reflects concerns about the presence of adversaries such as China and Russia in America’s backyard. In a wide-ranging interview with The New York Times, the president acknowledged that stabilizing and rebuilding Venezuela would take years. Yet, his stunning declarations raise more questions than they answer: they do little to clarify how the administration intends to translate military action into durable, strategic outcomes.

Maduro Cabal Still in Charge

What, for instance, did the American attack really change in Venezuela? At this juncture, Trump left intact the leadership cabal that enabled Maduro’s corrupt regime to thrive after he took power in 2013. For now, Maduro’s vice president, Delcy Rodríguez, is acting president. A Maduro ally, she has been recognized by the Venezuelan military, an integral part of Maduro’s corrupt drug ring. Various reports suggest the military has increased its armed patrols in Caracas, much as it did during Maduro’s tenure. But it’s hard to say how long Rodríguez will last.

Trump is scheduled to meet next week with Maria Corina Machado, the popular Venezuelan opposition leader who won the 2025 Nobel Peace Prize, an award that Trump covets. No one knows what the government will be like over the next weeks or even days, a knowledge gap critical to energy companies that typically invest based upon horizons that stretch over decades. As David Goldwyn, a former State Department energy coordinator, said, no company will commit billions without knowing the terms of an investment. “And they can’t know what the terms are until you know what the government is going to be.”

“Donroe” Doctrine: Don’t Mess with U.S.

For the president and his secretary of state, Marco Rubio, Venezuela is synonymous with all South and Latin American nations that fall under the umbrella of the “Donroe Doctrine.“ The phrase is a play on James Monroe’s 1823 doctrine warning external powers against interference in the Americas. Trump and Rubio have framed it as a signal to U.S. adversaries such as Russia, China, and Iran, all of which have some form of military presence in the region. Rubio, whose family left Cuba before the revolution, is particularly hostile to the island nation, while Trump has suggested it may be the next target for U.S. pressure, implying even more political instability.

Yet the ambiguity and confusion that plague the administration's political policies pale in comparison to the structural obstacles confronting Trump’s stated goal: reviving Venezuela’s oil industry and translating production into sustained revenue. The Venezuelan industry isn’t merely underperforming. It labors under more than two decades of systematic mismanagement and neglect. The nation once had a daily oil production of 3.5 million barrels. It now struggles to maintain 1 million barrels per day, or about 1 percent of global oil production. The collapse in output stems from operational failure, not geological constraints.

Estimates from the state oil company reveal the extent of the issue. Pipelines have not been updated in 50 years; nearly all refining facilities are in disrepair, with some unable to operate at more than 20-30 percent capacity. Fires and accidents cripple facilities that PDVSA can’t afford to repair. The country that once controlled ten percent of the U.S. market through its CITCO subsidiary now imports refined petroleum products because its own refining system can’t meet domestic demand, partially due to crippling U.S. sanctions.

Venezuelan Crude Oil Like Tar

Making matters worse is the nature of Venezuela’s oil. Its reserves consist mainly of extra-heavy crude from the Orinoco Belt, a tar-like oil that is expensive to extract, process, and refine. Developing it at scale requires technical expertise that the country lost when Chávez fired 19,000 PDVSA workers in 2002 and 2003. PDVSA’s research arm, Intevep, lost 80 percent of its workforce, gutting the company’s ability to innovate. Chávez replaced PDVSA's expert staff with political cronies, tripling the state company’s payroll while production plummeted.

The major oil companies' reluctance to make any firm commitments is understandable given their history of dealings with the Venezuelan government. Venezuela initially nationalized its oil industry in 1976, when US companies controlled over 70 percent of crude oil production under deals set to expire in 1983. Those firms lost billions of dollars in assets and received only limited compensation. Three decades later, Hugo Chávez engineered a “renationalization,” forcing the companies to partner with PDVSA and to surrender 60 percent of the projects in which they held stakes. ExxonMobil and ConocoPhillips refused and departed, a decision that led to years of international arbitration. A court eventually ordered Venezuela to pay ConocoPhillips more than $10 billion and ExxonMobil $1 billion. Venezuela has paid a fraction of the judgments. Under Trump’s call to revive the nation’s oil industry, companies face a stark choice: reenter a market that still owes them billions in unresolved claims, or allocate capital in jurisdictions that offer greater legal certainty and lower political risk.

Oil Glut Drives Price Down

Exxon already has a substantial, highly successful investment in neighboring Guyana, where 10 billion barrels of lighter crude oil were discovered in a country without a state-owned oil company and with lower taxes. Rice University’s Monaldi calls it “one of the most attractive oil places in the world.”

Even absent Venezuela political and technical problems, prices in the current global oil market make additional massive investments in Venezuela impractical. A persistent supply surplus has pushed prices below $60 per barrel, a 20 percent drop in 2025 alone. OPEC+ boosted production after years of production cuts, while inflation and economic uncertainty reduced demand. Extraction of heavy crude is particularly unattractive since it requires specialized refining and generates higher emissions than lighter alternatives.

Under current conditions, anticipated returns make investment in Venezuelan oil a bad bet. Restoring production to meaningful levels would require between $20 billion to $60 billion in capital over a decade, according to TD Securities, a consulting firm. Analysts estimate the breakeven point for Venezuelan crude is between $60 and $80 per barrel, depending on cost assumptions, while benchmark oil prices currently hover around $59.50 per barrel.

Moreover, Venezuelan oil returns would come long after any initial investment, making the capital returns a poor proposition, particularly when major oil companies have far better alternatives, such as Guyana, where the breakeven price is about $35 per barrel, while projects in the Permian Basin can be viable at $48. Factoring in Venezuela's heavy, difficult-to-process crude and political uncertainty, investment would likely require substantial guarantees from Washington or Caracas to offset the risks and improve returns.

Kleptocracy, Ostracism as Bad as War

Then there’s the problem with Trump’s implied timeline; it’s unrealistic. The President’s rhetoric implies that American oil companies will go into Venezuela to quickly “fix a badly broken” system. But America’s experience with revitalizing oil industries disrupted by war, such as Iraq and Libya, suggests a long slog. With help from American oil companies, the nation took nearly two decades to revitalize the Iraqi oil industry, and Libya has yet to achieve a complete, stable recovery to levels that existed prior to the overthrow of its dictator, Muammar Gaddafi.

In both cases, the oil industry revival involved fewer challenging tasks. Iraq and Libya faced physical destruction from war, but retained human capital and attracted reconstruction investment. Venezuela needs more than capital and security, even if the U.S. lifted the sanctions applied to Venezuelan oil. The country needs to rebuild critical assets such as institutional knowledge and supply chain management capacity. It shows how kleptocracy, economic isolation, and mismanagement can devastate energy production as thoroughly as war.

The sobering reality is that Venezuela’s oil revival, if it ever occurs, will take decades, not years. It will require enormous investment, sustained political stability that currently doesn’t exist, the creation of new legal and contractual frameworks, and market conditions that may never materialize. It would also require a reversal of corporate risk aversion shaped by recent experience. Absent these conditions, it is hard to see how oil companies would agree to invest in Venezuela without a government guarantee, which would ultimately shift significant risk onto American taxpayers.

Venezuela and the Limits of American Power

President Trump is correct in noting that Venezuela possesses extraordinary oil wealth, but the gap between his triumphant declarations and the sober assessments of energy experts reveals a fundamental truth about modern geopolitics: military success doesn't automatically translate into economic victory. America demonstrated it could execute a daring raid and remove a corrupt leader. What remains unclear is whether it possesses the patience, diplomatic skill, and financial commitment required to transform that tactical achievement into the strategic prize Trump promises.

Trump's Venezuelan strategy has become a test case for his broader vision of American dominance in the Western Hemisphere. Yet power achieved through force has historically proven brittle and expensive to maintain. The central challenge facing the administration is not whether American troops can execute spectacular raids—they clearly can. The question is whether a recalibrated American foreign policy can build durable coalitions, establish trust, and demonstrate the staying power that Trump currently seems to be backing away from in Europe.

For now, Venezuela's oil remains what it has been for decades: enormous potential locked underground. If Trump’s vision materializes and he can persuade oil companies to overcome their skepticism, more oil may flow. The primary benefit won’t be the oil itself, though. The more consequential payoff for the U.S. would lie in addressing the structural drivers of migration that have destabilized the hemisphere and caused a huge portion of Venezuela’s population to flee a country it calls home.

An optimistic scenario will require near-perfect political alignment, not to mention dealing with Venezuela’s $170 billion in external debt. A more likely trajectory points to years of managed instability, with competing factions vying for power and access to an uncertain oil revenue stream. America risks being drawn into a trap of an open-ended commitment marked by repeated interventions, blowback from Latin American allies, and continued migration pressures. While global oil markets could absorb a complete collapse of Venezuelan production, given the current glut, it can’t readily price political chaos.  

How significantly Trump’s raid changed Venezuela's political leadership remains uncertain. Whether it ultimately alters Venezuela's trajectory—and that of the Western Hemisphere—also remains an open question, one that only time, and likely decades of it, will answer.

–James O’Shea

James O’Shea is an award-winning American journalist and author. He is the past editor-in-chief of The Los Angeles Times, former managing editor of the Chicago Tribune, and chairman of the Middle East Broadcasting Networks. He is the author of three books, including The Deal from Hell, a compelling narrative about the collapse of the American newspaper industry. He holds a master’s degree in journalism from the University of Missouri.

Originally published in Eagle Intelligence Reports on January 18, 2026