Q&A: How Venezuela’s oil sector may—or may not— influence US energy markets
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Macro, Opinion
Published
January 28, 2026
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4 mins
Author
Matt Willer
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While the US operation in Venezuela has sent price concerns rippling through the oil patch, the impact on natural gas has been—and is expected to remain—far more muted. To understand why, we spoke with portfolio manager Matt Willer, Managing Director, Natural Resources Private Equity, who broke down the dynamics at play and what the industry should really expect.

 

Q: Why has the focus of the recent Venezuelan developments been on the oil market rather than natural gas market?


Willer: The main impact is on US refining. We don’t expect that the recent Venezuela situation is likely to move prices immediately, because Venezuela’s energy infrastructure needs major rehabilitation before it can get back to meaningful production levels. But it should impact US refiners as it may become another source of heavy oil used in refining. And from the start, this is really an oil‑only story.1 


Q: What makes Venezuelan crude distinct from US crude?


Willer: The oil produced in Venezuela is typically heavy and sour. That’s not a poorer grade, but it requires more refining. US production, by contrast, is mostly light sweet crude, which is more valuable because it’s easier to extract and refine.2 


Here’s an analogy: Heavy sour oil is like pouring a bottle of ketchup, while light sweet crude is closer to water. The “sour” part refers to sulfur content—sour crude contains more sulfur that must be refined out.


Q: Does Venezuelan oil compete directly with US production?


Willer: Not really. Venezuelan heavy sour crude doesn’t compete with US light sweet production. Instead, it benefits US refiners. Rather than sourcing similar heavy crude from Canada’s oil sands, refiners can get it from Venezuela. So, refiners win, but it doesn’t change much for US producers.


Q: Why is the impact on natural gas so minimal?


Willer: Venezuela has huge gas resources, but a sizable portion of it is reinjected back into oil wells to boost in oil production or flared rather than being developed for domestic use or for export.3  Because the country’s investment and infrastructure have lagged, developing gas reserves for export would require significant investment in dollars and time to have an impact globally.  


Also, unlike in the Permian Basin—or much of the US, really—Venezuela’s oil reservoirs don’t come with significant amounts of associated natural gas. So increased Venezuelan oil production doesn’t shift US natural gas dynamics.
In the long run, though, it could actually be a positive for US natural gas prices. Here’s why: More Venezuelan oil would put downward pressure on global oil prices over time and lower oil prices could slow US oil production, especially in the Permian Basin.


Since US natural gas supply is heavily tied to associated gas from oil drilling, slowing oil output would also reduce natural gas output. So ironically, Venezuelan oil might actually support higher long‑term US natural gas prices.


Q: Venezuela is known for massive oil reserves. Why aren’t they producing more?


Willer: They have huge reserves—world‑class. But they’re years away from getting that oil out of the ground on a meaningful scale.The problem is efficiency and capability. While they have the resources, they are severely lacking modern technology, expertise and capital to extract it effectively. Venezuela is producing today, but at sub‑optimal levels.


Q: How does the political environment affect international investment?


Willer: Security is a big issue. Companies like Exxon Mobile, ConocoPhillips and Chevron have all invested in Venezuela in the past, only to have their assets nationalized. The same thing has happened in Mexico.4 


These companies are still owed billions. So, the first question is: Can they get their money back? The second is: Is the environment stable enough to risk new capital? 


Q: What’s the broader strategic importance of Venezuelan oil to the US?


Willer: Some of it ties into the broader energy conversation around AI. Data centers need enormous amounts of power, and the US wants to ensure it has the energy resources to stay competitive with China.


Also, oil has a lot of uses beyond gasoline—refining, petrochemicals, plastics, industrial processes. Securing a supply from Venezuela helps ensure those resources stay available and out of the hands of competitors like China, which had been the primary buyer of Venezuelan crude. 

 

1“Country Analysis: Venezuela,” US Energy Information Administration. February 8, 2024.
2Oliver, Martin. “Merey 16-Technical profile, history, market and challenges of Venezuela’s heavy crude,” Shale24. January 13, 2026. 
3Praga, Mariana Praga, Deisy Buitrago, Mirceliy Guanipa. “Whoever wins election faces natural gas problem,” Reuters. July 24, 2024.
4Kimball, Spencer Kimball. “Maduro overthrow could help these US oil companies recover assets seized by Venezuela.” CNBC. January 8, 2026.

Important disclosures

Author

Matt Willer
Managing Director, Natural Resources Private Equity
Matt Willer is Managing Director, Natural Resources Private Equity focusing on energy and natural resources. He has been responsible for investment sourcing, due diligence, asset management and financial reporting since 2007.  
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