By: Wesley Muller | Louisiana Illuminator
President Donald Trump is unlikely to see many U.S. oil companies jump in response to his call to invest in Venezuela for the foreseeable future, industry experts say.
With low oil prices and better drilling opportunities elsewhere — along with the legally fraught idea of taking a sanctioned foreign nation’s natural resources — it would take several years, a shifting geopolitical landscape and either higher demand or a disruption to existing supplies before there’s any significant expansion into Venezuela, according to two energy sector economists and a former federal official and lawyer who specialized in oil industry investigations.
Following surprise military strikes on Caracas early Saturday and U.S. forces capturing its autocratic leader, Nicolas Maduro, Trump and several of his cabinet members have focused the public’s attention on Venezuela’s oil. The South American country is believed to have one of the world’s largest proven reserves of crude oil, which Trump has suggested could be extracted by American fossil fuel interests.
“We’re going to have our very large United States oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure and start making money for the country,” Trump said in a televised address Saturday morning.
Estimates place Venezuela’s reachable oil reserves at roughly 2.3 billion barrels, which is the equivalent of 100 billion gallons, according to the Baker Institute for Energy Studies at Rice University.
The political and logistical details of extracting and refining Venezuela’s oil is more complex than Trump’s depiction. For one, the price of oil is currently too low for all but the largest oil majors to expand their drilling and exploration, said David Dismukes, an economist and professor emeritus at the Center for Energy Studies at Louisiana State University.
Overall, 2025 was a sluggish year for the oil industry with crude prices starting at an average $79 per barrel in January and steadily losing ground due to an oversupply through the year, closing out December at $63 per barrel. The going rate sat at $57 per barrel as of Tuesday.
These prices are for benchmark crude, the “light” version that is more easily refined into finished petroleum products. The “heavy” crude oil from Venezuela typically trades $5 to $10 per barrel less than the benchmark rate, making it less valuable for exploration companies.
“We’re not running out of drilling opportunities in the U.S.,” Dismukes said.
Even if an oil company has the desire and resources to expand into South America, other countries such as Brazil offer virtually all the same potential benefits with none of the baggage of Venezuela, Baton Rouge-based economist Loren Scott said.
“The evidence is clear on that,” Scott said. “Offshore Brazil is extremely active right now.”
Dismukes said oil prices have largely moved “sideways” for the past few months, with small upticks quickly followed by small contractions. Absent financial incentives, the current numbers aren’t enough for most companies to start new drilling operations, particularly in a foreign country such as Venezuela, he added.
“The global market for energy is just really soft right now,” Dismukes said. “It’s just not really good timing right now to do something like that.”
In the face of such skepticism, Trump has floated the idea of giving federal subsidies to oil companies to cover the cost of their expansions into Venezuela.
“A tremendous amount of money will have to be spent, and the oil companies will spend it, and then they’ll get reimbursed by us or through revenue,” Trump told NBC News on Monday.
The oil and gas industry is already heavily subsidized and is set to receive over $34.8 billion per year in federal handouts, thanks in part to the enactment of Trump’s One Big Beautiful Bill, according to a report from Oil Change International, a group that opposes fossil fuel subsidies. More than $1 billion of that goes strictly to the costs of drilling new wells under a decades-old subsidy, according to the Committee for a Responsible Federal Budget.
Throughout his campaign, Trump said he would unleash American energy “dominance” with new drilling across the U.S., promising to bring gasoline prices below $2 per gallon. Gasoline prices have been trending downward since July 2022 and saw a $0.25 cent drop over the 2025 calendar year. The nationwide average sits at $2.81 per gallon as of Wednesday.
Generally, when oil prices fall, consumers benefit from cheaper fuel. But the profit margin shrinks for oil companies, often leading to production shutdowns and sometimes layoffs or bankruptcies. It is especially pronounced for companies in Democratic nations compared with state-controlled oil producers in authoritarian countries such as Saudi Arabia and Russia that have, in the past, flooded the market with an oversupply of oil to manipulate prices and drive western competitors out of business.
Per-barrel oil prices in the low $50 range are unsustainable for most oil producers, and new exploration and drilling typically only starts when prices climb above $80 per barrel, Scott said.
“It’s not a happy price right now for people in the oil industry,” Scott said.
Gov. Jeff Landry, a close Trump ally, was quick to praise the president’s strategy in an editorial he penned Monday for Breitbart News. The governor claimed that a “successful reboot” of Venezuela would have a “tremendous impact” on Louisiana’s economy and create high-paying jobs at the state’s ports and refineries.
The largest concentration of refineries with the capability to process Venezuela’s heavy crude are in Louisiana and Texas. The 15 crude oil refineries in Louisiana can process nearly 3 million barrels of crude oil per day, which accounts for one-sixth of U.S. refining capacity, according to the U.S. Energy Information Administration. Texas can handle 6.3 million barrels daily, providing a third of the nation’s refining.
A new stream of heavy crude could prove beneficial for certain U.S. refineries that use it as a blending agent to process light crude, according to Mark Zappi, a petroleum engineer who heads the Energy Institute of Louisiana at the University of Louisiana-Lafayette.
Many Gulf Coast refineries were originally built to handle heavy crude and later modified to process light crude as domestic drilling ramped up. Some still require a supply of heavy crude to operate, and most of it is imported from Canada, Zappi said.
Having a second source of this feedstock is generally good for reducing refining costs and at least would provide flexibility for times of uncertainty like when major weather events disrupt supply chains, he said.
“The only thing you can count on in the energy arena is not being able to count on anything,” Zappi said.
While there is some potential for Trump’s vision, experts say it will likely take many years to have any sizable impact on the Gulf Coast oil sector or the American economy.
“It’s gonna take a while for this to happen — years,” Dismukes said. “It’s not gonna be a big opportunity that people are jumping up and down about.”
While Venezuela has large oil reserves, it can only produce a maximum of about 1 million barrels per day with its current infrastructure. The U.S. currently produces about 13.5 million barrels per day from domestic drilling, according to federal data.
There are also complex legal issues at play when it comes to extracting the natural resources of a foreign nation, said Braden Perry, a compliance officer and former senior trial attorney at the U.S. Commodity Futures Trading Commission. The federal agency investigates crimes related to trading on energy markets, cryptocurrencies and other commodities.
Companies would need express permission from the Venezuelan government or a clear United Nations Security Council mandate to legally extract any oil from within Venezuela’s borders, Perry said. Without either of those, it would be a violation of international laws governing state sovereignty, he added.
Even if the Trump administration gets permission, American oil companies could run into a number of other compliance issues with other markets or governments. One potential choke point is the reluctance insurers might have to underwrite operations that might trigger penalties, including existing European Union sanctions on Venezuela.
Insurance companies cover their own risks through the reinsurance market, most of which is based in the United Kingdom and European Union, which often imposes much stricter exclusions than American underwriters, Perry said.
Maduro, whom the U.S. and other nations refused to recognize as the legitimate president of Venezuela, still has his vice president and the rest of his administration running the country. Opposition leaders in Venezuela might challenge any drilling permits or agreements offered by the current government, further complicating the situation and the risk for investors.
“So it’s not simply a technical or geological issue, it’s geopolitical and legal,” Perry said. “These markets are not only controlled by regulators, but also by insurance, banks, reinsurers, and exchanges.”
In a social media post Tuesday night, Trump claimed Venezuela’s interim government authorities have agreed to turn over 30 million to 50 million barrels of “sanctioned oil.” It will be shipped to the U.S. and sold at market prices, and the U.S. president would hold onto the money on behalf of the Venezuelan people, Trump wrote.
Perry said it’s unclear what Trump means by “sanctioned oil” but that any Venezuelan-origin crude would be blocked from sale unless the sanctions are lifted.
“I presume there could be some executive or legal order as part of the plan, but that is unclear,” Perry said.
The president has broad authority to lift sanctions that have been imposed through executive orders, but some of the actions against Venezuela are congressional sanctions that could require legislative approval to lift or amend them.
“Sanctioned oil doesn’t become marketable by announcement,” Perry said. “This will be a complicated process to provide formal sanctions relief, ensuring the market — and shippers, financiers and insurers — is comfortable and has mitigated the real risk associated with the purchase of Venezuelan oil.”
As for setting up shop in Venezuela, Dismukes, the LSU economist, suggested that if a new government forms there, it will likely take years before investors are confident it won’t devolve into authoritarianism. The U.S. could offer some sort of financial securities and incentives, but the potential benefits would still need to be greater than what’s already available in other places, he said.
Some degree of geopolitical stabilization needs to happen before oil companies will want to invest or expand into Venezuela, Scott added.
Venezuela began the nationalization of its oil industry in the 1970s under President Carlos Andrés Pérez, who negotiated the transition with companies such as Exxon, Chevron and Shell. In the mid-2000s, President Hugo Chavez seized assets from several foreign oil companies, some of which continue to wage legal battles against the country to recover their losses.
Only Chevron has remained there to operate, with Venezuela accounting for less than 10% of its overall global production, according to company figures. Chevron’s partnership with the state-owned oil company, Petróleos de Venezuela, S.A., accounts for nearly one-fourth of the nation’s output.
“Stabilization is the first key,” Scott said. “That’s critical … How do you give oil companies the confidence to go back in there, to say you don’t have to worry about somebody coming and taking your stuff?”