Maduro out: heavy crude, high stakes—why Venezuela remains vital to the US amid the China rivalry

Report by Yazbek Wehbe, English adaptation by Karine Keuchkerian

Since former Venezuelan President Hugo Chávez used oil a quarter century ago to support Cuba and expand ties with Russia and China, Washington’s view of Venezuela shifted, turning it into a direct political adversary.

Venezuela, long a U.S. ally where American oil companies once invested in nearly two-thirds of its oil sector, underwent this political shift despite holding the world’s largest proven oil reserves, estimated at about 303 billion barrels, or roughly 17% to 20% of global reserves.

The country also has natural gas reserves exceeding 200 trillion cubic feet, in addition to strategic mineral resources. It is widely understood that global conflicts, even when they appear military in nature, are driven primarily by economic factors.

Venezuelan oil is particularly important to the United States because it is heavy, high-sulfur crude, which is denser and more viscous than the “light” oil produced by many U.S. fields, especially shale oil fields in Texas and North Dakota. 

Heavy crude requires specialized refineries, most of which are concentrated along the U.S. Gulf Coast, particularly in Texas and Louisiana. Historically, these refineries were built to process heavy crude imported from nearby countries, particularly Venezuela and Mexico.

For many years before the U.S.-Venezuela dispute, these supplies provided crude well-suited to refinery configurations and were often priced lower than lighter grades. Heavy crude typically yields larger shares of products such as diesel, marine fuel, and asphalt materials, compared with light oil, which is more commonly refined into gasoline and lighter derivatives.

The U.S. economy also faces a significant deficit, and gaining control over Venezuelan oil would force major oil-exporting countries, notably Russia and Iran, to further reduce their oil prices.

On another front, economic competition between Washington and Beijing continues in various forms, with China currently the largest importer of Venezuelan oil exports. According to a U.S. Energy Information Administration (EIA) study, Venezuela exported about two-thirds of its oil shipments to China in 2023, through both direct and indirect channels.

As a result, Washington, by seeking to remove Venezuela's leader, Nicolas Maduro, aims to assert influence over this issue, partially constrain China, and impose conditions on these exports.

Attention now turns to Sunday morning to assess the direction of oil prices after the weekend. The question is whether prices will continue to decline along their current path or rise temporarily before resuming a downward trend later.