US intervention in Venezuela: What it means for oil prices
On January 3, 2026, US special forces carried out a decisive operation against the Venezuelan leadership, capturing President Nicolas Maduro and signaling a dramatic escalation in tensions between the US and Venezuela. Both the Venezuelan President and his wife were brought to the US to appear in federal court on Monday, January 5, 2026. In a press conference, US President Donald Trump said that the US would “run” Venezuela temporarily and “get the oil flowing”. On Sunday January 4 he stated that the US was “in charge” of Venezuela. The operation followed months of US military buildup in the region, with aircraft carriers and numerous warships positioned in the Caribbean, as well as a series of deadly strikes on more than 30 boats that the administration claimed were carrying drugs. Codenamed “Absolute Resolve”, the operation started before 02:00 in the morning local time on January 3, 2026, when more than 150 US military aircraft took off to conduct airstrikes across Northern Venezuela.
Venezuela’s oil reserves: Potential vs. Reality
With roughly 303 billion barrels of oil, Venezuela holds the world’s largest proven oil reserves. This amount represents almost 17% of global crude oil reserves. Despite massive potential, the country is currently only producing a fraction of its historic output due to decades of underinvestment, sanctions and political turmoil. A key part of the US strategy is the belief that Venezuela’s oil industry can be rebuilt, and that American firms will play a pivotal role in this process. Currently, Chevron is the only major US firm operating in Venezuela, shipping around 140,000 barrels per day in Q4 of 2025. Venezuela’s oil production has experienced a significant downturn since its peak in the late 1990s. The South American country is currently producing around 800,000 barrels per day - a far cry from the US’s 13.8 million.
Brent crude price decline
At the time of writing, Brent crude oil is currently trading at around $61.7 US Dollar per barrel. In comparison the price was above $76 in early January 2025. This means the price has fallen by more than 19% over the last 12 months. Vontobel offers a wide range of leverage products with Brent crude oil as underlying, and you can gain both long and short exposure depending on your view.
Effects of the intervention and the road ahead
Despite the geopolitical drama, the short-term impact on crude oil prices has been modest. In the first trading session after the US intervention, both Brent and West Texas Intermediate oil prices fell. On Sunday January 4, President Trump said that sanctions on Venezuela’s oil industry would remain in place but added that US companies would help rebuild infrastructure and increase output, in what will likely be a long and complicated process. According to the International Energy Agency, worldwide oil supply is expected to exceed demand by 3.8 million barrels a day in 2026, which would mark a record surplus. If political stability and major investment align, increased Venezuelan supply could further dampen prices further but this is years away. Oil analysts have estimated that Venezuela’s crude oil production could increase up to half a million barrels per day if the country achieves political stability and investment from US companies. Therefore, it is unlikely that the revival of Venezuela’s oil industry will be a major price driver in the immediate future, rather it is potentially more of a medium-to-long-term prospect.
Risks
Credit risk of the issuer:
Investors in the products are exposed to the risk that the Issuer or the Guarantor may not be able to meet its obligations under the products. A total loss of the invested capital is possible. The products are not subject to any deposit protection.
Currency risk:
If the product currency differs from the currency of the underlying asset, the value of a product will also depend on the exchange rate between the respective currencies. As a result, the value of a product can fluctuate significantly.
Market risk:
The value of the products can fall significantly below the purchase price due to changes in market factors, especially if the value of the underlying asset falls. The products are not capital-protected
Product costs:
Product and possible financing costs reduce the value of the products.
Risk with leverage products:
Due to the leverage effect, there is an increased risk of loss (risk of total loss) with leverage products, e.g. Bull & Bear Certificates, Warrants and Mini Futures.
Disclaimer:
This information is neither an investment advice nor an investment or investment strategy recommendation, but advertisement. The complete information on the trading products (securities) mentioned herein, in particular the structure and risks associated with an investment, are described in the base prospectus, together with any supplements, as well as the final terms. The base prospectus and final terms constitute the solely binding sales documents for the securities and are available under the product links. It is recommended that potential investors read these documents before making any investment decision. The documents and the key information document are published on the website of the issuer, Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany, on prospectus.vontobel.com and are available from the issuer free of charge. The approval of the prospectus should not be understood as an endorsement of the securities. The securities are products that are not simple and may be difficult to understand. This information includes or relates to figures of past performance. Past performance is not a reliable indicator of future performance.
© Bank Vontobel Europe AG and/or its affiliates. All rights reserved.