Recent developments in Venezuela are expected to influence oil production, global crude flows and energy logistics, with potential knock-on effects for shipping routes, refining hubs and future project cargo demand, according to analysis from Wood Mackenzie, a global energy consultancy.
Changes in the country’s political and regulatory environment have introduced near-term downside risk for oil prices, while creating longer-term uncertainty for upstream investment and the logistics chains that support oil and gas production. The consultancy notes that any easing of US sanctions could bring additional Venezuelan barrels to an already oversupplied market in early 2026.
Venezuela produced approximately 820,000 barrels per day (b/d) in November 2025, but output is expected to decline following a US naval blockade imposed on 17 December. Wood Mackenzie estimates production could fall by 200,000 to 300,000 b/d in early 2026 as market participants withdraw and inventories force curtailments.
While dormant wells could be restarted relatively quickly under favourable conditions, the recovery path remains constrained by degraded infrastructure, reduced service-sector capacity, security considerations and limited access to diluent required for heavy crude production. These factors also affect transport and logistics providers supporting oilfield operations.
With global oversupply expected in 2026, particularly in the first quarter, oil prices have so far reacted only modestly to the December blockade. Potential adjustments to US sanctions policy could allow Venezuelan crude exports to resume to US refiners, generating short-term cash flow but adding pressure to an already oversupplied market.
Additional Venezuelan barrels could push Brent crude prices below the mid- to high-US$50 per barrel range projected for early 2026, while reshaping crude trade patterns across the Atlantic Basin.
Before sanctions were imposed, Venezuela was a major exporter of refined products, supported by the Paraguana refining complex, once among the largest in the world. Crude processing has since declined by around 75%, falling from nearly 1 million b/d in 2010 to approximately 250,000 b/d in 2025.
A longer-term return of Venezuelan refining capacity could increase competition for European and Atlantic Basin refiners, while also impacting tanker demand, port throughput and downstream logistics. However, refining recovery is unlikely to precede substantial upstream investment.
Restoring production to the 2 million b/d last achieved in 2016 would require multi-billion-dollar investment, alongside fiscal and legislative reforms aimed at attracting international operators. Breakeven costs for key heavy oil projects in the Orinoco belt remain above US$80 per barrel Brent, while unresolved legal claims and regulatory uncertainty continue to weigh on investment decisions.
Historical comparisons suggest recovery could take years rather than months. Libya, for example, took nearly a decade to partially restore oil output following political upheaval in 2011.
An increase in Venezuelan crude exports would divert Middle Eastern heavy barrels toward Asia and intensify competition for Canadian crude on the US Gulf Coast. High-complexity refineries in the United States, India and China could benefit from wider light-heavy crude price differentials, supported by existing infrastructure designed to process Venezuelan heavy oil.
While Venezuela’s resource base remains attractive to major oil companies and national operators, meaningful commitments are expected to depend on improved security conditions, stable fiscal terms and a predictable regulatory environment.
