By Alan ApthorpPublished On: January 5, 2026Categories: Daily Market News & Insights, Fuel Prices, News
The capture of Venezuelan President Nicolás Maduro by U.S. forces during an overnight operation on January 3 sparked global headlines and widespread attention. But what is the impact for fuel markets?
So far, the event has only sent a brief ripple through global oil markets. WTI crude markets traded roughly $1/bbl lower this morning, but have since moved into somewhat positive territory for the day. Similarly, diesel and gasoline prices are trading around 1-2 cents higher. Let’s unpack exactly why the market is reacting this way – and what the long-term implications are.
U.S. Pump Prices: Minimal Impact
One reason for the calm response is the current global supply backdrop. Venezuela’s oil production remains below 1Mbpd, accounting for less than 1% of global supply. At the same time, demand growth has been modest, and OPEC+ continues to manage output against forecasts for a sizable supply surplus. OECD projections point to a global oversupply of nearly 3.8 Mbpd extending into 2026, leaving limited room for short-term price spikes tied to Venezuela alone.
For U.S. consumers, the immediate effect is negligible. Venezuela’s current output, which is less than 1 Mbpd, accounts for under 1% of global supply. While risk premiums briefly ticked up, they quickly normalized. With crude representing roughly half of retail gasoline costs, the lack of sustained movement in oil benchmarks suggests little immediate impact at the pump.
Short-Term vs Long-Term
Where Venezuela becomes more relevant is in the distinction between short-term disruption risk and longer-term supply potential. Venezuela holds the world’s largest proven reserves, with over 300 billion barrels, roughly 17% of global totals. However, decades of underinvestment and sanctions have slashed production from 3 Mbpd to under 1 million. There is significant potential, but the long-term vs short-term impacts should be considered.
Short-Term Impacts: In the very short-term (1-3 months), instability could cause Venezuela’s output to drop lower than it already is. In an analysis, JP Morgan compared this event to the 2002-03 PDVSA strike, when production fell sharply in a brief period. Because global supplies are already robust, this drop in production is unlikely to have major consequences for global oil prices.
Long-Term Impacts: Beyond the immediate term, if political stability returns and infrastructure investments flow, JP Morgan believes output could climb toward 1.3-1.4 Mbpd within 2 years, with more gains in future years. U.S. majors like Chevron and Exxon are reportedly exploring opportunities, but rebuilding Venezuela’s oil sector will require billions in capital and years of work.
Venezuela is known for producing very heavy, sour crude – a product that requires advanced refineries for processing. The top markets capable of refining that crude are the US (especially the Gulf Coast refineries), China, and India. Heavy sour crude is particularly important for its output of asphalt, marine fuels, and petroleum coke, since lighter crudes don’t always provide enough of these products to meet industrial demand.
More importantly, depending on how directly the US plans to exert influence on Venezuela’s oil sector, this action could give the US control of an enormous amount of global oil supply. While the US is fourth on the list of proven oil reserves, Venezuela is in the first-place spot with 16% of all global proven reserves. Together, under US influence, that would account for nearly 30% of all global crude reserves, giving the US significant abilities to shape global markets over the coming decades.
Key Takeaways
Maduro’s capture is a geopolitical headline, not a market earthquake. For now, U.S. consumers can expect stability at the pump. In the short-term, Venezuela may see its oil production decline moderately, but eventually this change is likely to unleash more oil on an already well-supplied market, keeping prices lower and positioning the US to exert more influence if global prices do begin to swell.
This article is part of Daily Market News & Insights