Wall Street Warns: U.S. Oil Giants Turn Bearish on Trump’s Venezuela Rebound Amid Political & Fiscal Risks

Wall Street's flashing red lights on Venezuela—and the big players are hitting the brakes.

The Political Minefield

Forget easy money. Major U.S. oil firms are pulling back from Venezuela's promised rebound under a potential Trump return, citing a tangle of sanctions, regime instability, and legal quicksand. The geopolitical math just doesn't add up for long-term bets.

Fiscal Fantasy vs. Reality

The dream of a quick fiscal fix is colliding with a broken economy. Hyperinflation, crippling debt, and a production infrastructure in tatters make any 'rebound' a decade-long project at best. Wall Street analysts see more value in a lottery ticket than in Caracas' balance sheets right now.

The Bottom Line

When the suits on Wall Street start warning about political risk, it's usually a sign the smart money has already left the building. For now, Venezuela's oil revival remains a headline—not an investment thesis. Some plays are all risk, no reward.

Breakdowns at ports and oil fields slow any chance of a comeback

During the twelve years that Nicolás Maduro ruled, the country’s oil infrastructure fell apart. He was captured by U.S. forces early Saturday, but that doesn’t fix broken pipes. The system is in chaos. Ports are so slow that loading a single supertanker can now take five days, compared to just one day seven years ago.

The Orinoco Basin, which holds close to half a trillion barrels of recoverable crude, is a graveyard of abandoned rigs.Equipment gets stripped in broad daylight and sold as spare parts.

Nobody is checking the spills. Underground pipelines are falling apart and, in some cases, were stolen by the state oil company and sold as scrap metal. Fires and explosions destroyed key machinery.

The Paraguana refinery complex, once the biggest in Latin America, barely works. It runs off and on and only at low rates. Its four oil upgraders, which are supposed to clean the thick crude into something usable, have been shut down. The country can’t even process what it pulls out of the ground.

Banks say production could shift prices but warn against hype

RBC Capital Markets analysts, including Helima Croft, said traders looking for a quick recovery are dreaming. They wrote that some people will pretend this is a “Mission Accomplished” moment and bet on 3 million barrels a day coming back fast.

But that only happens if there’s full sanctions relief and a smooth transition of power. Helima warned that even then, “it will be a long road back for the country.”

Neil Shearing, chief economist at Capital Economics, said Venezuela still claims the world’s largest proven reserves, but that doesn’t mean much.

“Theory and reality diverge sharply,” Neil said. He pointed out that nobody really knows where the politics are heading now that Maduro is out. Even if production hit 3 million barrels a day, Neil said that only adds about 2% to the global supply.

Goldman Sachs analysts, including Daan Struyven, wrote that Brent crude prices could swing $2 a barrel up or down depending on how Venezuela performs.If production falls by 400,000 barrels a day, prices could rise.

If it climbs by that much, prices might fall. Over the longer term, Goldman sees risk. If Venezuela hits 2 million barrels a day by 2030, that could knock $4 a barrel off oil prices, compared to their current projections.

Chevron is the only major U.S. oil company still drilling in the country. The Houston-based firm is responsible for about 25% of current output and is allowed to operate under a special license despite U.S. sanctions.

The two other U.S. players that could help, Exxon and ConocoPhillips, are sitting out for now. Both left after their assets were seized in the mid-2000s by Hugo Chávez. Neither Exxon nor ConocoPhillips responded when asked for comment, though Exxon has said before that it would only return if conditions were right.

Chevron said it’s focused on the safety of its workers and protecting its assets in Venezuela. “We continue to operate in full compliance with all relevant laws and regulations,” the company said.

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