Venezuela's Post-Maduro Prospects in a Decarbonising World

By Samuel Mendoza Gramberg

Escalating tensions in the Middle East are once again threatening global oil supplies and driving crude prices higher. Against this backdrop of tightening energy markets, Venezuela, a former petroleum superpower, has returned to the geopolitical spotlight after its president, Nicolás Maduro, was captured in a US military operation. What does the economic future of the petrostate look like after Maduro’s removal, and what role does the European Union play during its transition to green energy?

Venezuela's past century has been marked by political instability due to numerous military coups, corruption scandals and hyperinflation.  At the beginning of the 2000s, socialist president Hugo Chávez initially inspired the masses with promising social reforms financed by the nationalisation of the oil sector. Despite early economic successes, the economic model proved unsustainable as it was overly reliant on the oil sector. The socialist movement’s popularity steadily declined, and by the time the successor of Chávez, Nicolas Maduro, took office, accusations of human rights violations and political repression were mounting. From 2017 onwards, Donald Trump tightened sanctions, denying Venezuela access to US financial resources and ultimately sanctioning the state-owned oil company PDVSA by banning oil imports to the United States. Years of crisis followed, with millions leaving the country and hyperinflation reaching 130,000 per cent. Despite the crisis, there was a controversial re-election of President Maduro in 2024. The conflict between the US and Venezuela escalated, culminating in the kidnapping of President Maduro on 3 January 2026, who has been accused by the United States of involvement in narcotrafficking—an allegation that remains contested. Nevertheless, Maduro's political loyalists, led by Vice President Delcy Rodríguez, continue to hold power. This raises important doubts regarding the possibility of policy change.

Venezuela's Prospects in the Global Energy Market

Looking at Venezuela's economy, it is striking that despite its abundant natural resources, including the world's largest oil reserves, the country has never managed to achieve the final leap to economic prosperity. What it has managed, however, is to provide another textbook example of the “resource curse”. Containing around 303 billion barrels of crude oil reserves, it possesses roughly twenty per cent of the total worldwide reserves, and oil exports usually account for around two-thirds of the government's budget. However, after reaching a level of oil production of 3.2 million barrels in the 1990s, it fell to less than 558,000 barrels per day in 2021. The US’s harsh economic sanctions are not the only reason for the decline of the Venezuelan industry. In fact, the economy was highly dependent on ‘black gold’, making it vulnerable to price fluctuations. A drop from 100 US dollars in 2014 to 30 US dollars per barrel in 2016 hit Venezuela hard and amplified a trend of economic decay. Ultimately, its refinery infrastructure deteriorated due to years of underfunding and mismanagement.

Although acting president Delcy Rodriguez has stated her willingness to cooperate economically with the United States, further challenges remain. First and foremost, the existing political uncertainty is making investors wary, especially after the nationalisation of the oil sector in the 2000s. Second, Venezuela’s vast reserves are far from easy to exploit. Venezuelan crude oil is considered extra heavy and viscous, making extraction costly and technically demanding. Exxon CEO Darren Woods even considers Venezuela to be “uninvestable”. Experts estimate Venezuela's breakeven price to be close to 80 dollars per barrel. In comparison, neighbouring Guyana can already make a profit at seven dollars per barrel. Nevertheless, recent developments in the world's oil market suggest a more promising future for Venezuela. Since late February, the price of crude oil has risen by roughly 60 per cent, climbing above 120 dollars per barrel and exceeding Venezuela's 80 dollars breakeven price as tensions in the Middle East intensified.

The Impact on Europe's Energy Security

Europe, meanwhile, remains in the midst of an energy crisis. High power and petroleum prices are putting European industry to the test, and with conflicts in the Middle East coming to a head, there is no relief in sight. This raises the question of Venezuela's potential as a crude oil supplier for Europe and what future cooperation might look like. With a trade volume of 2.74 billion euros in 2024, the European Union is Venezuela's third-largest trading partner after the United States and China. Imports from the EU primarily consist of chemical products, minerals, and machinery. Despite the difficulty in refining the viscous crude, exports to the EU primarily consist of petroleum, accounting for 70 per cent of trade. When contextualising these figures, it is notable that Venezuela's goods exports to the EU account for a negligible 0.1 per cent, half of which is being traded between Spain and Venezuela. Repsol, a Spanish energy group, has already announced plans to scale up production in Venezuela.  

It follows that on the one hand, the EU could follow Spain's lead and expand its energy supply through cooperation with Venezuela. On the other hand, however, the EU is in the midst of a transition to green energy. The European Green Deal set the goal of making the EU climate neutral by 2050 and is moving, albeit with heavy steps, towards reducing fossil fuel imports and CO2 emissions. Nevertheless, the energy transition is a gradual process, and the EU will certainly remain dependent on energy imports for the next few decades. The long-term goal is to phase out fossil fuels, but the short- and medium-term priority remains a stable and diversified energy supply. In this context, Venezuela could still play a transitional role as a supplier to the EU, particularly if political conditions improve and investment in the dilapidated infrastructure becomes possible. Cooperation is not necessarily at odds with the Green Deal, but could temporarily be part of a broader strategy to secure energy supplies while green energies are further expanded.Venezuela remains a country of untapped economic potential, currently facing a turning point. The debate, however, extends far beyond just oil. The country also possesses natural gas and mineral resources that could potentially become relevant not just for global technology supply chains but also for a diversified EU energy security. For now, however, Venezuela faces a narrowing window for economic repositioning, as fossil fuels play an increasingly irrelevant role in a European market that is transitioning towards green alternatives. The country’s future hinges on a fragile balance: rebuilding its oil sector quickly enough to revive the economy, while simultaneously preparing for a world that is slowly leaving fossil fuels behind. 

Sources: CFR, DGAP, The Economist, European Commission, Euronews, Financial Times

Written by Samuel Mendoza Gramberg

Edited by Sarah Valkenburg and Gabrielle Ludes