We Don’t Expect Changes to Our Oil Price Forecast or Fair Value Estimates from Maduro’s Ouster
Markets likely priced in Venezuelan supply disruption, and OPEC+ actions and seasonal demand weakness set up a supply glut.
On the morning of Jan. 3, 2026, US forces deposed Venezuelan President Nicolas Maduro. US President Donald Trump said that the United States will “run” Venezuela until there can be a “proper transition,” and he highlighted a desire to substantially increase US private investment in Venezuela’s oil infrastructure.
Why it matters: Venezuela’s vast oil reserves are thought to be the largest in the world, with roughly 300 billion barrels—exceeding Saudi Arabia—based on third-party estimates. Still, the country’s production output has fallen to less than one-third of what it was 50 years ago (not even 1% of the global supply).
- The Venezuelan government nationalized the oil industry in the 1970s, and former president Hugo Chavez aggressively expanded the seizure of oil assets nearly 20 years ago. Oil production has materially declined after years of mismanagement and paltry infrastructure investments.
- It’s unclear how the US administration will attract the investment it seeks anytime soon. Operators remain cagey due to the recent memory of these asset seizures, and their reluctance is heightened by the uncertainty around who will eventually govern Venezuela.
The bottom line: We don’t plan to alter our fair value estimates or our midcycle oil price estimates of Brent $65/bbl and WTI $60/bbl. While significant Venezuelan supply increases to global markets could be bearish for our 10-year forecast, we think it will take years for supply to meaningfully increase.
- Venezuela will require years of large capital investments to modernize its infrastructure. We don’t presently expect that the country will attract that level of investment until lower-cost production like US shale peaks. While slowing, it still has some runway.
- We apply futures pricing for our assumed near-term pricing. While we speculate we could see some upward price movement, we think it’ll be short-lived. Markets likely priced in Venezuelan supply disruption, and OPEC+ actions and seasonal demand weakness set up a supply glut.
Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
United States