Venezuela, geopolitics, and what moves oil prices in 2026

Key takeaways:

• A return to past production levels in Venezuela is possible in theory, but it would take years and remains uncertain, as seen in other recovery cases such as Iraq.

• The sharp decline in Venezuela was driven mainly by above ground factors, not geology, and not sanctions alone, with the structural weakening of the sector starting well before sanctions.

• Policy shifts under Hugo Chávez changed the investment climate through tougher terms, nationalisation pressures, and legal disputes, which contributed to a long lasting loss of confidence and capital.

• Operational capacity deteriorated after deep institutional disruption and the loss of technical expertise, which is why rebuilding output is a slow process even if conditions improve.

• Sanctions relief could bring some additional barrels back to market, but the most realistic near term outcome is a few hundred thousand barrels rather than a supply surge that shifts global balances.

• The size of reserves does not determine market influence, because governance, contracts, and legal frameworks above ground decide whether reserves can translate into reliable production.

• Direct intervention by a major power is rare and closely watched, and it raises geopolitical uncertainty while sending a signal to other sanctioned producers such as Russia and Iran.

• Oil prices remain anchored by fundamentals and surplus expectations, so extra barrels would add downside pressure, while OPEC’s cautious stance reflects a preference to wait for clearer signals.