Following weeks of rising diplomatic and economic pressure from the Trump Administration on Venezuela’s president Nicolas Maduro, in which Venezuelan oil tankers have been seized by U.S. forces and Nicolas Maduro allegedly refused gilded voluntary exile in Turkey, Donald Trump this week ordered a limited military strike on the Venezuelan capital Caracas and took the Venezuelan president and his wife into U.S. custody. A flawlessly executed military operation once again underlined the immense capabilities of the U.S. armed forces (and again illustrated the impotence of Russian air defenses in Venezuela against Western weaponry), but leaves many questions unanswered, as Donald Trump exerts American power in the Western Hemisphere.
It remains unclear what precisely was the goal of the military operation – seizing Maduro, instituting a new U.S.-friendly government (and if so based on opposition figures or existing regime insiders), or securing improved access to Venezuelan oil for U.S. companies? Donald Trump at his Saturday press conference and senior members of the Administration at different stages appears to have endorsed all these goals. Seizing the Venezuelan president has been achieved with extraordinary success (no American soldiers were killed) through prolonged planning and well executed U.S. military and intelligence services cooperation, and Donald Trump has clearly shown that governments deemed hostile in the Western hemisphere will feel the full force of U.S. government power, but there appears to be no discernable or credible plan to achieve more ambitious U.S. goals in Venezuela. This poses ongoing political and economic risks to both the United States and Venezuela.
Donald Trump stated during his press conference that “We’re there now, but we’re going to stay until such time as the pop- — proper transition can take place. So we’re gonna stay until such time as, we’re gonna run it, essentially, until such time as a proper transition can take place.” But that is strictly speaking not true, though Trump also noted that “we’re not afraid of boots on the ground if we have to have. We had boots on the ground last night at a very high level, actually. We’re not afraid of it. We don’t mind saying it, but, uh, we’re gonna make sure that that country is run properly. We’re not doing this in vain.” There are no U.S. troops today in Venezuela to promote American political and economic interests here, and it remains unclear which local political forces the Trump Administration will seek to rely on.
Despite emphasizing the political need to use military force to end the “Chavista dictatorship” in place in Venezuela since the fraudulent election in 2024, Trump made it clear that he does not intend to help place opposition figures like the opposition leader Edmundo González (currently in exile in Spain) robbed in the 2024 election or Nobel Peace Prize winner María Corina Machado in positions of power in Caracas. The need to restore Venezuela to democratic rule, even through the U.S. military grabbing an illegitimate repressive president from his guarded compound, has been at least rhetorically an important part of the guarded reaction to the military action from many traditional U.S. allies around the world. It does not, however, appear to play an important role in the forward planning of the Trump Administration.
Instead, the Trump Administration currently seems to focus on relying on the exiting Venezuelan vice president Delcy Rodríguez to the instrument of U.S: power projection inside Venezuela. This though, while the personal risks of suffering a “Maduro style seizing” of their own will likely weigh on the minds of Ms. Rodriguez and other key regime leaders, seems a very risky political strategy for the Trump Administration. Not only is the Chavista regime in Venezuela to a material degree politically and ideologically based on “opposition to U.S. imperialism in Latin America”, making it unlikely that even if Delcy Rodríguez decided to “switch sides” that she could politically command the full loyalty of all regime institutions. Turning “one bastard into our bastard” might not suffice for Donald Trump, and the risks of regime splits inside Venezuela – with armed strife and possible further U.S. military involvement to follow – appears very high in this scenario. Delcy Rodríguez in any case does not appear in her public appearances in Venezuela to play along with Donald Trump’s ideas, having on state TV for at least domestic political consumption called for the return of Nicolas Maduro to power. Her relations with the Trump Administration and the goals of U.S. policy in Venezuela remains shrouded in the fog of incursion (not quite war).
It must also be recalled that economic interests of especially Chinese (but also Russian) oil companies inside Venezuela have grown very large since Hugo Chavez took power in 1999, and that these firms will have a degree of political support from their respective governments. Non-US foreign oil exploration in Venezuela will also have supplied key parts of the current regime with economic wealth that they are unlikely to give up and handover (or return according to the Trump Administration) without a fight. China has an estimated $60bn loan exposure to Venezuela, repaid gradually through cut price oil exports of Venezuelan heavy crude (likely at deep discounts as many OECD countries have sanctioned Venezuelan oil exports) that a number of Chinese refineries are now optimized for using. Beijing in other words have sizable skin in the game in Venezuela, hereby providing the Trump Administration another card to play in its own relations with China, but also giving Beijing an evident incentive to fight to retain its interests in Venezuela.
Notions of “U.S. running Venezuela” will likely require deployment of significant additional U.S. military, political, and not least economic resources, all of which the Trump Administration will – as has been elaborated already by Kim Wallace in his note today – in the end have to get from Congress. As Kim notes, this appears a major domestic political risk for Donald Trump in a mid-term election year, already characterized by rising healthcare premia and accelerating campaigning. Overall, the apparent abandonment of Trump’s opposition to “U.S. Forever Wars” that a sustained engagement in Venezuela would entail could hurt MAGA movement cohesion and Trump supporters’ willingness to show up and vote come November.
The domestic political risks for Donald Trump of a longer engagement in Venezuela hence appear significant, something that would not be altered by a possible economic and political collapse in Cuba following a probable end to subsidized Venezuelan oil supplies to Havana before the U.S. mid-terms. Obviously domestic Venezuelan political figures will be aware, when taking their personal decision on where and with whom they stand going forward, of the uncertain Congressional prospects for actually funding any extended Trumpian power play into Venezuela.
Given this highly uncertain political outlook inside Venezuela, it strains credibility to assume that U.S. oil companies would now commit significant private resources (or in Chevron’s case increase their existing commitment) inside Venezuela to increase local oil production. It is possible that U.S. oil companies might commit to do so, out of consideration for other possible economic benefits (or harm) that the Trump Administration might bestow upon the industry elsewhere in return for supporting the president’s Venezuelan gambit. This though would not, due to the likely high levels of domestic political instability, lead to noteworthy near or even medium-term oil production increases in Venezuela.
While the prospects of lifting of the de facto U.S. oil embargo on Venezuela will therefore have increased somewhat in the near-term by the capture of Maduro, it seems unlikely that “facts on the ground” inside Venezuela will lead to a boost in oil production. As Kim has noted, too, any money for U.S. engagement in Venezuela is consequently not likely to come from local oil fields.
The impact on global oil supply of the U.S. incursion into Venezuela is hence likely to be linked only to the forward impact of possible easing of U.S. restrictions on Venezuelan crude exports and hence be short-term in scope. This should see U.S. shale producers already under some pressure from falling oil prices breathe a sigh of relief, having perhaps wondered why the U.S. government is now seemingly pursuing access to foreign oil reserves, rather than better develop domestic ones.
All told, Donald Trump has taken a major political gamble in Venezuela and might well with the capture of Maduro already have cashed in all the plausible political and economic benefits from this action – from now on it gets a lot harder. In the longer run, political stability in Venezuela looks unlikely and the prospects for Trump having the resources to sustain a U.S. commitment in Venezuela and the local oil industry are too uncertain to secure the commitment of U.S. private capital to the country. Accordingly, the impact on oil prices looks directionally to be downwards but fleeting in duration.
The ultimately likely high costs of sustaining any U.S. engagement in Venezuela looks likely – as was the case with the George W. Bush Administration after the invasion of Iraq in 2003 – to ultimately temper Donald Trump’s appetite for and political capacity to forcefully project U.S. military power overseas in anything more than the one-off operations seem with the 2020 strike on IRCG leader Qassem Sulaimani, or the bombing of Iran’s nuclear facilities in 2025.
Jacob
