WASHINGTON, D.C. (January 6, 2026) — Despite having the world’s largest oil reserves, Venezuelan crude has a number of characteristics that make it difficult to refine and transport: it is very heavy, with high density and sulfur content, and requires additional processing to dilute it or refine it in specialized facilities. Venezuela has various types of crude oil—extra-heavy, heavy, medium, and light—which gives the country significant potential to meet international market demand.
Although it is oil of “poor quality,” it accounts for 17.5% of global reserves: about 303 billion barrels, according to data from OPEC’s 2024 Annual Statistical Bulletin. The largest reserves are concentrated in the Orinoco Belt, where there are large deposits of heavy and extra-heavy crude buried at greater depths. However, it is difficult to transport because most of it is very heavy crude with a high sulfur content, which corrodes metal pipelines and complicates handling.
All of this, combined with sanctions on Venezuela and the lack of suitable vessels, has created storage and transportation problems.
INFRASTRUCTURE THAT REQUIRES MASSIVE INVESTMENT
This oil requires processing to achieve a quality suitable for transport and refining, a process that raises costs and requires adequate infrastructure. However, according to Javier Rivas, a professor at EAE Business School, the country’s infrastructure is in very poor condition, and as early as 2023 it was estimated that an investment of $250 billion was needed to upgrade it and restore production to 3 million barrels per day.
Although until the 1990s this infrastructure was very advanced, under chavismo and the nationalization of the industry it became obsolete and lost refining capacity or the ability to carry out processing tasks that would allow its transport. Rivas believes that two scenarios are now opening up: either the country’s oil infrastructure is repaired in the medium and long term, or this oil is shipped in specialized vessels to Florida (U.S.), which has refining capacity—an option that would not be desirable for Venezuela.
Despite having the world’s largest reserves, the country’s production is stagnant. Venezuela has been under economic sanctions for years and depends largely on the so-called “shadow fleet” to export its oil, much of which is shipped to China.
IF PRODUCTION RESUMES, PRICES WILL FALL
According to Philippe Waechter, chief economist at Ostrum (a Natixis IM subsidiary), if the United States takes control of Venezuela and sanctions on oil exports are lifted, production will resume, increasing oil supply on the global market and causing oil prices to fall. Meanwhile, economist and Fortuna SFP founder José Manuel Marín Cebrián adds that after years of sanctions, institutional deterioration, and obsolete infrastructure, the immediate risk is not a further drop in already depressed production, but rather a logistical collapse.
The market fears not so much a physical shortage of oil as the inability to move it. Marine insurance, regulatory uncertainty, potential blockages at terminals, and doubts about contractual validity introduce a geopolitical risk premium that is passed on to the price per barrel. “Rebuilding Venezuela’s productive capacity will take years, but price tensions are immediate,” he adds.
Gonzalo Escribano, of the Elcano Royal Institute, explained in an interview on RTVE that the sanctions imposed on Venezuela made it difficult to import the necessary diluents, compounded by the withdrawal of foreign investment, although a license held by U.S. oil company Chevron remains in force. Escribano expects that from now on international oil companies will return and take charge under this new policy.
With information from EFE
