By Vugar Bayramov, Member of the Parliament of Azerbaijan
When it comes to the impact of Nicolás Maduro’s arrest on oil prices, several scenarios can be projected. Although international organizations present differing figures regarding Venezuela’s daily oil production, all of them indicate that the country does not hold a particularly strong position in the global market. According to the U.S. Energy Information Administration (EIA), Venezuela ranks 18th among oil-producing countries, with daily output of 1.098 million barrels. The EIA also reports that 72 percent of total global oil production is accounted for by just ten countries. Trading Economics reports a broadly similar picture, ranking Venezuela 17th with daily production of 1.142 million barrels.
Another important consideration is that Venezuela is not among the world’s top twenty oil exporters. With exports of 438 thousand barrels per day, the country ranks 22nd globally. This low export volume is, naturally, a consequence of the sanctions imposed on Venezuela. In 2024, Saudi Arabia accounted for 15.2 percent of global oil exports in value terms. The top five exporters also include Russia (9.7 percent), the United States (9.4 percent), the United Arab Emirates (9.1 percent), and Canada (8.5 percent).
However, for investors, a more important factor than all of the above is Venezuela’s position as the country with the world’s largest oil reserves. Venezuela holds 18.2 percent of total discovered global oil reserves, followed by Saudi Arabia (16.2 percent), Canada (10.4 percent), and Iran (9.6 percent). This means that the exploitation of Venezuela’s oil reserves by the United States would, in the near future, lead to a large volume of oil entering the market and a sharp increase in supply. Such a scenario would exert downward pressure on oil prices. By comparison, after U.S. investment entered Iraq’s oil sector and significantly expanded production, Iraq now accounts for 8.0 percent of total global oil exports in value terms.
Nevertheless, it is not unlikely that the realization of a sharp supply scenario will take time. This is because the technological modernization of Venezuela’s oil infrastructure requires not only financial resources but also time. This, in turn, means additional time before large volumes of Venezuelan oil can enter the market.
Another scenario involves the risk of potential chaos in Venezuela. In this case, the oil market would react differently to developments. Even so, a sharp increase in oil prices is not expected. This is because Venezuela’s current level of production and exports does not have a significant impact on the market. Even if its exports were to decline, this would not create conditions for price increases.
All of this suggests that, even if not in the short term, noticeable declines in oil prices in the medium term will be inevitable. This further increases the priority of replacing oil revenues with other sources through economic diversification.
