Analyzing the complex dynamics of Venezuela’s oil industry: a U.S. policy imperative.
As crude oil prices dip below $70 per barrel and U.S. tariffs reshape North American energy flows, Venezuela’s faltering oil industry presents both a challenge and an opportunity for American leadership in Latin America. With China deepening its influence, allies like Cuba teetering on the brink of energy collapse, and regional stability at stake, the United States faces a critical juncture. Petróleos de Venezuela S.A. (PDVSA), once a powerhouse, now struggles under sanctions, mismanagement, and global market shifts. This article dissects these dynamics and urges U.S. policymakers to act decisively to secure energy security, counter adversaries, and stabilize the Western Hemisphere.
Global Oil Market Trends
The global oil market is in flux, with prices dropping below $70 per barrel in early 2025—a 20% decline from mid-2024, according to the Organization of the Petroleum Exporting Countries (OPEC, 2025). OPEC+ has ramped up production to stabilize supply, but weakening global demand, driven by economic slowdowns in Europe and Asia, has left producers vulnerable (Smith, 2025). U.S. tariffs on Canadian and Mexican oil imports, enacted in late 2024, further complicate the landscape. These levies, averaging 15%, aim to bolster domestic production but risk disrupting trade flows, pushing U.S. refiners to rethink sourcing strategies (U.S. Department of Energy, 2024). For Venezuela, this volatile market demands adaptability it can scarcely muster.
Venezuela’s Oil Industry Under Pressure
Venezuela’s oil sector is a shadow of its former self. Production has plummeted from 2.5 million barrels per day in 2013 to under 700,000 in 2025, crippled by years of underinvestment and mismanagement at PDVSA (Energy Intelligence, 2025). The revocation of Biden-era concessions in 2024—most notably Chevron’s operational licenses—dealt a severe blow. These partnerships had injected $2 billion in foreign investment since 2022, modernizing infrastructure and boosting output by 15% (Johnson, 2024). Without them, PDVSA’s aging rigs and refineries falter, unable to compete in a market that rewards efficiency.
Emerging players like Petro Roraima, a PDVSA-linked entity operating in Venezuela’s Roraima Basin, highlight additional risks. Reportedly backed by Chinese investment, Petro Roraima has ramped up exploration in border regions, potentially smuggling oil to evade sanctions and fund illicit activities, including drug trafficking (Silva, 2025). Leadership vacuums compound the crisis. With Tarek El Aissami imprisoned and Alex Saab sidelined, Oil Minister Pedro Tellechea faces mounting pressure to reverse the decline (Rodriguez, 2025). Yet, U.S. sanctions throttle PDVSA’s access to capital and technology, while domestic unrest and corruption erode operational capacity. Venezuela must realign its strategy—likely leaning harder on allies like China—but its ability to do so remains in doubt.
China’s Strategic Role
China looms large over Venezuela’s oil woes. As the world’s second-largest oil consumer, Beijing has become a lifeline, importing roughly 300,000 barrels per day from Venezuela in 2024 despite U.S. sanctions (Chen, 2025). Past loans totaling $60 billion since 2007, repaid in oil, have funded PDVSA infrastructure, though mismanagement has dulled their impact (Li & Wang, 2023). Geopolitically, China’s support bolsters its Latin American foothold, countering U.S. influence and aligning with its Belt and Road ambitions (Zhang, 2024). For Venezuela, this partnership offers survival but risks deeper dependence—a dynamic the U.S. cannot ignore.
Regional Fallout
Venezuela’s struggles reverberate across the region. Cuba, reliant on Venezuelan oil for 60% of its energy needs, has seen imports halve since 2019, triggering blackouts averaging 12 hours daily in 2025 (Garcia, 2025). Nicaragua, another ally, faces economic strain as Venezuelan aid dries up, exacerbating its isolation under Daniel Ortega’s regime (Martinez, 2025). CARICOM nations, dependent on imported energy, grapple with rising costs and climate pressures, their ties to Venezuela offering little relief (Caribbean Community Secretariat, 2025). Mexico, meanwhile, could see a surge in Venezuelan migrants if instability worsens, straining its role as a U.S. partner in border security (Hernandez, 2025). This cascading instability threatens a migration surge and power vacuum the U.S. must address.
Impact of a Major Hurricane on Cuba’s Energy Grid
Cuba’s fragile energy grid, already buckling under fuel shortages and aging infrastructure, faces catastrophic risks from a major hurricane. In November 2024, Hurricane Rafael’s 115-mph winds collapsed the national grid, leaving 10 million without power (NPR, 2024). With generation capacity at 533 megawatts against a peak demand of over 3,000 megawatts during a December 2024 blackout (CBC News, 2024), a similar storm in 2025 would likely cause prolonged outages. Declining oil imports—down to 32,600 barrels per day from Venezuela in 2024 (Global News, 2024)—and sanctions limiting spare parts (The Guardian, 2024a) hinder recovery, as seen after Hurricane Oscar delayed restoration in October 2024 (CNN, 2024a). Blackouts disrupt water and food supply, risking unrest and migration, while straining U.S. regional security interests (Garcia, 2025; Hernandez, 2025).
Venezuela’s Harassment of Guyana’s Oil Exploitation
Venezuela’s actions against Guyana’s burgeoning oil sector add another layer of tension. Guyana’s offshore Stabroek Block, operated by ExxonMobil, holds over 11 billion barrels of oil equivalent, transforming the nation into a regional energy player (Offshore Technology, 2024). Yet, Venezuela claims the adjacent Essequibo region and its maritime waters, a dispute dating back to the 19th century. On March 1, 2025, a Venezuelan naval vessel entered Guyana’s exclusive economic zone (EEZ), approaching ExxonMobil’s Liza Destiny platform and demanding information—an act Guyana condemned as a violation of its sovereignty (Reuters, 2025a). Venezuela’s government denied the incursion, asserting the waters are disputed and accusing Guyana of illegally granting oil concessions (Reuters, 2025b).
This harassment is not new. In 2018, Venezuelan navy ships intercepted ExxonMobil survey vessels, halting exploration (Reuters, 2018). Recent escalations, including troop movements and threats to annex Essequibo, suggest Venezuela may persist. Motives include deflecting domestic crises, asserting regional dominance, and disrupting Guyana’s economic rise, which threatens Venezuela’s oil legacy despite its own 300 billion barrels in reserves (Offshore Technology, 2024). The International Court of Justice (ICJ) is adjudicating the dispute, but Venezuela rejects its jurisdiction, favoring the 1966 Geneva Agreement (Reuters, 2023). With China’s backing and U.S. sanctions limiting its own production, Venezuela’s provocations may intensify, especially as Guyana’s output nears 1.2 million bpd by 2027 (University of Navarra, 2023).
Policy Implications for the U.S.
The United States cannot cede this arena to China or ignore the regional fallout. Strategic action is essential to turn Venezuela’s crisis into an opportunity. Three recommendations stand out:
- Leverage Tariffs Strategically: Adjust tariffs on Canadian and Mexican oil to pressure Venezuela into democratic reforms. By dangling market access as a carrot—while maintaining sanctions as a stick—the U.S. can weaken Maduro’s grip and curb China’s leverage, all while stabilizing North American energy flows (U.S. Department of Energy, 2024).
- Offer Targeted Sanctions Relief: Provide conditional, limited relief on PDVSA sanctions tied to verifiable production increases and humanitarian progress. A 20% output boost could yield $5 billion annually, easing Cuba’s energy crisis and reducing China’s dominance—provided Maduro complies (Energy Intelligence, 2025). The U.S. must also monitor Petro Roraima’s activities, as its smuggling operations could undermine sanctions and funnel funds to narco-networks, threatening regional security (Silva, 2025).
- Lead Regional Energy Diplomacy: Partner with Brazil and Mexico to diversify CARICOM’s energy sources, investing $500 million in renewable projects over five years. Mexico, producing 1.6 million bpd through Pemex, could supply technical expertise and oil to the region, offsetting Venezuela’s decline while strengthening U.S.-Mexico energy ties under the USMCA (Pemex, 2025; Caribbean Community Secretariat, 2025). This coalition would bolster U.S. soft power, reduce Venezuela’s regional sway, and counter China’s economic inroads, while deterring further harassment of Guyana’s oil operations and supporting Cuba against hurricane-induced collapse (Reuters, 2025a; CNN, 2024a).
Conclusion
Venezuela’s oil industry hangs in the balance, and with it, the stability of Latin America. Plummeting production, U.S. policy shifts, and China’s growing shadow create a precarious moment—one the United States must seize. Proactive leadership through targeted sanctions, strategic tariffs, and regional alliances, particularly with Mexico, can secure American interests, from energy markets to geopolitical influence, in an uncertain world. The cost of inaction is clear: a stronger China, a destabilized region with Cuba on the brink, and unchecked Venezuelan aggression against Guyana’s oil ambitions.
William Acosta and Jesus Romero
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U.S. Department of State, United States Southern Command, COL Carl D. Springer, US Army (Ret) Tulsi Gabbard Diario las Américas The Epoch Times The Epoch Times Español Jesus Romero William Acosta Truth Social innovated by President Donald J. Trump Enrique “Ric” Prado Breitbart News Association of Former Intelligence Officers Inc. (AFIO)
Source:Miami Strategic Intelligence Institute
