:max_bytes(150000):strip_icc()/GettyImages-2252027715-3726ab78a8bb44e088953a560479edc2.jpg "Don’t Expect Venezuelan Oil to Mean Lower Gas Prices in the U.S., Experts Say")
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Key Takeaways
- Experts don’t expect recent U.S. military action in Venezuela to impact American gas prices anytime soon, regardless of whether it reduces or increases Venezuela’s oil exports.
- Venezuela produces less than 1% of the world’s oil on a daily basis, making it a small player in oil markets despite its vast reserves, and experts say it will likely take years for Venezuela’s oil output to materially impact global oil markets.
Gas prices have been trending lower for years, but the average American still pays more at the pump today than they did before the pandemic. Will the overthrow of Venezuelan President Nicolás Maduro change that? Don’t count on it.
Venezuela is home to nearly 20% of the world’s known oil reserves, but decades of underinvestment, government corruption, and, beginning in 2017, U.S. sanctions on the country’s state-run oil company, have decimated its petroleum industry. The country pumped an average of 900,000 barrels a day in 2024, down from nearly 3.5 million in 1997 and 2.3 million in 2016.
Experts say the contraction of Venezuela’s oil output over the past decade is one of the main reasons this weekend’s events won’t impact prices at the pump soon. A gallon of regular unleaded gas currently costs around $2.82, according to AAA data, down from about $3.07 a year ago.
“Even under the most optimistic outcomes, it could take years of positive developments for additional supply to meaningfully move the needle, and the impact on U.S. gasoline prices may ultimately be limited,” said Patrick De Haan, lead petroleum analyst at GasBuddy.
Why This Is Important
Fuel prices are a major driver of inflation because the cost of transporting goods gets passed on to consumers of those goods. Gasoline, one of the most common household expenses in America, also figures highly in consumer perceptions of the inflation rate.
A resolution of affairs between the U.S. and Venezuela could return to the global market some 200,000 barrels of Venezuelan oil that a U.S. blockade is currently obstructing, according to Morgan Stanley. Nonetheless, the impact on near-term oil supply will be “probably somewhat limited,” analysts wrote.
Experts say global oil markets could weather even a worst-case scenario. “A total collapse in Venezuelan production and exports would tighten the supply of heavy crudes to both the US Gulf Coast and Asia, but oil markets could manage such losses given oversupplied conditions,” said Daniel Sternoff, a senior fellow at Columbia University’s Center on Global Energy Policy.
President Donald Trump on Saturday said U.S. oil firms would “fix” Venezuela’s crumbling oil infrastructure, but experts warn that plan faces major obstacles. Experts say repairing neglected pipelines and storage facilities would take years and likely cost tens of billions of dollars. Extracting Venezuela’s heavy, sour crude is also less profitable than drilling for America’s lighter oil, complicating the economics of the investments Trump expects. Political uncertainty and the Venezuelan state’s finances are additional concerns for oil executives.
“There is no precedent whereby regime change in a major oil producer has led to a rapid increase in output,” said Sternoff. Experts at energy consultancy Wood Mackenzie say Venezuela could double its oil output in one to two years “given favorable conditions,” but that the cost of additional expansion and Venezuela’s OPEC membership may stymie the complete revival of its oil industry.
While Venezuelan oil isn’t likely to lower U.S. gas prices anytime soon, experts expect Americans to feel some relief this year anyway. GasBuddy expects the national average price of gas to fall to $2.97 a gallon this year, the lowest since 2020, due to “the unwinding of post-pandemic market distortions, expanding global refining capacity, and more stable supply chains.”
