Venezuelan crude oil has once again found itself at the centre of global oil market debate, given the recent US attack on the country and subsequent abduction of its president, Nicolás Maduro
And while some analysts opine that tighter US control over Venezuelan exports could quickly redirect barrels, reshape trade flows, or even alter global supply balances, the issue isn't so straightforward. It's actually more of a technical issue than a political one—one shaped by geology, refining economics, logistics, and capital availability.
Reserves vs reality
While Venezuela holds the world’s largest proven crude oil reserves—a fact that is frequently cited—these reserves reflect hydrocarbons in the ground, not barrels that can be produced, processed, and reliably delivered to market. Venezuelan production is overwhelmingly onshore, concentrated in the Orinoco Belt, where output consists largely of ultra-heavy and extra-heavy crude grades.
These barrels are among the most technically demanding in the global system. They are dense, high in sulfur, and often require blending with lighter crudes or condensates before they can even be exported. This ultra-heavy crude requires hundreds of billions of dollars in sustained investment in upstream, upgrading, logistics, and export infrastructure. Even under the most optimistic assumptions, restoring production to historical levels would take many years, not months. As a result, reserves alone do not translate into market power unless accompanied by capital, technology, and time.
Over the past decade, underinvestment, operational degradation, and infrastructure decay have sharply limited Venezuela’s ability to monetise its resource base. As a result, export capacity is far below the geological potential. Venezuelan crude exports have typically fluctuated between 700,000 and 900,000 barrels per day when flows are relatively stable. That number, not the reserves number, is what matters for market impact.
China vs the US
Over the past several years, China has emerged as the primary destination for Venezuelan crude. This relationship is not driven by crude quality preference—Chinese refiners are not natural buyers of ultra-heavy oil—but by commercial flexibility. Chinese buyers have been willing to accept deep discounts, irregular delivery schedules, and elevated logistical risk.
Equally important is how these barrels are paid for. Venezuelan crude moving to China has often been settled through non-standard mechanisms: commodity swaps, debt repayment structures, indirect settlement arrangements, and, according to market reporting, at times alternative financial channels outside the traditional dollar-based system. These structures allow barrels to move despite sanctions, but they also distort pricing transparency and delay cash realisation. China, in effect, has served as a clearing outlet of last resort, absorbing barrels that struggle to find compliant homes elsewhere.
If Venezuelan crude were redirected toward the United States, the nature of the trade would change fundamentally. US refiners operate within a highly regulated, transparent, and dollar-denominated commercial system. Crude must be purchased outright, financed through compliant banks, insured by recognised providers, and cleared through legally defensible contracts.
Informal barter arrangements, opaque swap structures, or crypto-linked settlements—mechanisms that may function in bilateral or sanctions-adjacent trade—do not scale into the US refining system. The United States does not “take” crude; it buys crude, at market-linked prices, under enforceable commercial terms. This distinction alone significantly limits the amount of Venezuelan oil that can be absorbed by the US market and at what price.
