The abduction of President Nicolás Maduro and his wife on 3 January by Washington — a hawkish act I didn’t fully support — has triggered the most radical transformation of Venezuela’s oil industry in decades.
On 29 January, Venezuela’s National Assembly approved sweeping reforms to energy laws, opening the door to privatisation and reversing decades of socialist state control through PDVSA.
Orlando Camacho, ruling‑party lawmaker and head of the Assembly’s oil committee, said the reform “will change the country’s economy.” The new law adjusts extraction taxes and sets a royalty cap of 30%, allowing the executive branch to determine percentages for each project based on investment needs, competitiveness, and other factors.
Crucially, foreign investors will now be able to resolve expropriation disputes in independent courts, rather than only in Venezuelan courts controlled by the ruling party.
Following the developments in Caracas, President Donald Trump announced that American oil companies would soon arrive in Venezuela to evaluate reconstruction projects, though some firms such as ExxonMobil remain cautious in the short term. Trump also ordered the reopening of Venezuelan airspace to support these efforts, which is already yielding some positive results.
As of 20 January, reports indicated Venezuela had received $300m in direct oil revenue — the first instalment of a $500m tranche from a broader $2bn oil deal negotiated between the Trump administration and the interim Venezuelan government.
Washington has also returned the M/T Sophia, a seized supertanker, as part of efforts to stabilise the industry.
A tilted deal between the Trump administration and acting President Delcy Rodríguez established a new oversight system. Sanctioned oil can now be sold at market prices (instead of at discount to China), but proceeds are deposited into U.S.-monitored accounts abroad (including in Qatar) and released to four authorised Venezuelan banks.
These funds are earmarked for essential services such as policing and healthcare to prevent misuse while the country stabilises.
Rodríguez said: “We are unfreezing resources from Venezuela that belong to the Venezuelan people…This will allow us to invest significant resources in equipment for hospitals — equipment we are acquiring in the United States and in other countries.”
The U.S. has also begun unblocking an estimated $30bn (as of 2022) in previously frozen Venezuelan assets as part of this “working agenda.”
Recovery path for Venezuela oil
Venezuela is targeting an 18% increase in output by 2026, aiming for 1.2m b/d compared to the about 900,000 b/d reported before Maduro’s capture.
Despite holding a fifth of the world’s proven reserves, Venezuela’s production had significantly declined due to storage congestion and sanctions from the U.S. But fields are now gradually being restored, boosting output.
Foreign investment is expected to reach $1.4bn in 2026 through new production‑sharing contracts, up from $900m last year.
American refiners such as Valero have increased purchases of heavy Venezuelan crude, facilitated by U.S.-authorised marketing through firms like Trafigura and Vitol.
By 21 January, 7.8m barrels had been exported under new licences, with total exports doubling to 15.7m barrels by 29 January. Roughly 50% of that volume went directly to the U.S.
Status of sanctions and diplomacy
However, the U.S. continues to enforce a naval “quarantine” to block shipments to adversaries such as Cuba, while selectively easing sanctions to allow American technology to repair Venezuela’s infrastructure.
Secretary of State Marco Rubio described these measures as an “interim” phase, warning of repercussions if Rodríguez’s interim government — composed largely of Maduro loyalists — fails to comply.
Trump has called her government “very strong,” while Rodríguez has insisted Venezuela is not under U.S. tutelage.
Rubio told the Senate Foreign Relations Committee on 28 January that Rodríguez “is well aware of the fate of Maduro,” adding: “It is our belief that her own self-interest aligns with advancing our key objectives. We are prepared to use force to ensure maximum cooperation.”
Meanwhile, the U.S. has confirmed Laura F. Dogu, former ambassador to Nicaragua and Honduras, as the new charge d’affaires to Venezuela — a step seen as critical for restoring full diplomatic ties severed in 2019.
