Investors weigh how revived Venezuelan supply could cap crude prices and pressure Canadian producers
Venezuela’s vast oil reserves may keep a lid on prices – and on the inflation hedges institutional investors count on.
US President Donald Trump’s removal of Nicolas Maduro and pledge that US oil majors will “run” Venezuela’s oil sector has added geopolitical drama, but most market watchers see a medium‑ to long‑term story of more supply and softer prices, not a price spike.
That matters for funds that use energy and commodities as inflation protection and for Canadian plans exposed to domestic producers.
According to CNBC, Venezuela holds the world’s largest proven oil reserves but currently pumps about 1m barrels a day – less than 1 percent of global output – after years of nationalization, mismanagement, corruption and US sanctions.
CBC News reported that production has fallen from roughly 3.5m barrels a day in 1999 and that experts expect it will take years, if not a decade or more, plus tens of billions of dollars, to restore capacity.
In the short term, analysts don’t see a supply shock.
CNBC reported that Brent crude fell about 19 percent in 2025 and US crude nearly 20 percent as OPEC+ increased output and US production reached a record just over 13.8m barrels a day.
Reuters said Brent has been trading around US$60–US$61, with US West Texas Intermediate near US$57.43, and noted that US and Asian equities actually rose while gold gained more than 1 percent after the Venezuela strike.
Arne Lohmann Rasmussen of A/S Global Risk Management told CNBC that markets had already priced in a Venezuela conflict and estimated that Brent might add only about US$1–US$2 before drifting below its prior close of US$60.75.
He said that despite the “huge geopolitical event,” there is still too much oil in the market for prices to “go ballistic.”
Rapidan Energy’s Bob McNally told CNBC that about a third of Venezuelan output is at risk, but he does not see a meaningful short‑term threat to global supply.
The bigger issue for long‑horizon investors is what happens if Venezuela actually comes back.
MST Financial’s Saul Kavonic told CNBC that exports could approach 3m barrels a day in the medium term if sanctions are lifted and foreign investors return.
Energy consultant David Goldwyn told CNBC that “the future of Venezuela will have a bearish impact on the market, because there’s really nowhere to go but up.”
Reuters quoted Brian Jacobsen of Annex Wealth Management as saying that unlocking “massive quantities of oil reserves over time” could support global growth by lowering energy costs, while Cumberland Advisors’ David Kotok said cheaper oil would be bullish for stocks if it materializes.
For funds, that points to a potential environment of stronger risk assets but weaker energy‑sector cash flows and lower commodity‑linked inflation hedges.
Demand is the other moving piece.
McNally told CNBC that until late last year, the consensus was that oil demand would stop growing within about four years because of electric vehicles, fuel efficiency and climate policies.
He said that as the US, China and Canada weaken climate policies and electric vehicle sales fall, the case for investing in Venezuela’s reserves has become more attractive and “all of a sudden you’re starting to say: ‘Whoa, we’re going to need more oil.’”
For Canadian plans with heavy domestic energy exposure, the competitive angle is key.
The Globe and Mail reported that both Canada and Venezuela have massive heavy‑oil reserves and that many US refineries in the Midwest and Texas are configured for these grades.
US imports from Venezuela were about 1m barrels a day in 2013 but dropped to a trickle after sanctions in 2019.
Over the same period, Canadian exports to the US climbed from 2.7m barrels a day in 2013 to a peak near 4.4m by mid‑2024, before easing below 4m as more barrels moved to Asia via the expanded Trans Mountain pipeline.
The Globe and Mail said that expansion to 890,000 barrels a day sharply reduced the discount on Canadian crude.
Rory Johnston of Commodity Context told The Globe and Mail that, if sanctions ease, the main point of competition between Canadian and Venezuelan heavy crude would be the US Gulf Coast, already a major outlet for Canadian barrels.
He said more Venezuelan supply there could lower demand for Canadian crude in that region, pushing shipments onto remaining Trans Mountain capacity or into re‑exports from the Gulf Coast, with higher tolls and extra transport leaving “low realized netbacks for Canadian producers.”
At the same time, he said Canada should retain dominance in the US Midwest because of its pipeline network.
Heather Exner‑Pirot of the Macdonald‑Laurier Institute told CTV News that Trump’s stated aim to “run” Venezuela is a medium‑term risk to Canada but a reminder “to not panic and stay competitive.”
She said US Secretary of State Marco Rubio’s emphasis on enforcing an “oil quarantine” rather than governing day‑to‑day suggests Trump’s comments remain, for now, threats rather than policy.
Exner‑Pirot told CTV News that Trump needs to navigate the global political unrest his actions sparked before he can profit from Venezuelan oil or significantly disrupt Canada’s sector, though she added that Venezuela could reshape oil markets in favour of the US over the long run.
On the policy front, Exner‑Pirot told CTV News that Prime Minister Mark Carney and Alberta Premier Danielle Smith have been “heading in the right direction” by focusing on new markets, diversification and competitiveness for Canadian oil.
