As oil executives meet with the administration of US President Donald Trump, a realization is dawning. The capture of Nicolás Maduro and possible occupation of Venezuela may not be enough to create ideal business conditions. Previous US interventions, such as in Iraq, happened under the guise of democracy. As for Venezuela, Trump has made it clear – this is about oil. His candor comes against the backdrop of his administration’s energy dominance agenda, a strategic plan to leverage energy resources to influence global politics. On the surface, the events of January 3 could be read as a win for US power and economic primacy. They checked the oil aspirations of China and Russia in America’s “backyard.” But Venezuelan oil may prove to be a liability. It is not the crude the world needs. As the world decarbonizes, the US oil industry may sink money into the country that is needed elsewhere. This scenario offers an opportunity for Germany to evaluate a new status quo in which the German government must work to hedge energy security against a Washington bent on unilateral action to assert energy dominance.
The Husk of the Venezuelan Oil Industry
At first glance, the swift intervention of the United States in Venezuela seems to be a well-planned operation that secures the country’s future as a supplier of fossil fuels to US companies – a promising economic outlook. Venezuela has more than 303 billion barrels of oil in proven reserves, roughly one fifth of the global total. Foreign investment has long sought to exploit this. The reserves, upon which Venezuela has built a leading oil industry with top infrastructure, talent, and technology, have made it the richest country in Latin America.
But this Venezuela no longer exists. Oil production and GDP have collapsed. Most foreign firms left. Political loyalty – not sector expertise – became what secured top jobs at its national oil company, Petróleos de Venezuela (PDVSA). With talent and technology gone, much of the infrastructure was looted and abandoned. The country’s energy sector is in shatters, rendering it more of a liability for the investments of US companies.
To “make Venezuela great again,” billions are needed, as is technology and know-how. Even for oil industry standards, Venezuela is a tough environment for investment. The government is kleptocratic. Military and political elites control the economy and will fight to sustain it. The armed forces, industry staff, and civil servants collaborate with criminal groups known for pirate raids on oil infrastructure. Having a government in transition in such a volatile environment also does nothing to inspire investor confidence. While US troops or private contractors could step in, they would struggle to provide security. Venezuela is particularly well armed. Its two most recent presidents – Hugo Chávez and Nicolás Maduro – intended to make the country difficult to occupy and distributed military grade weapons to the population.
Returns on investment may be limited. The country’s largest reserve, the Orinoco Belt, produces extra-heavy crude. Producing it is expensive, and few companies other than Chevron have the equipment, technicians, or refineries geared for that process. Bringing the crude to market adds additional cost. The field is inland, and transport infrastructure lies in shambles – as do the harbors that load cargoes for global customers. Even for a deposit that produces lighter, easier-to-refine crude, the western Maracaibo basin, the business case is all but straightforward. It will take years and determined political support to mobilize the capital and investor confidence that would enable Venezuela’s oil industry to thrive again.
Understanding US Energy Dominance
Fracking revolutionized the energy sector of the United States. By 2024, it produced almost twice as much oil as Saudi Arabia. Still, Venezuelan oil may be a welcome addition to the US energy portfolio. This is because the United States produces and exports a light, sweet crude. Its refineries, however, are equipped to process heavier crudes, like those from Venezuela. Extending US control over this type of heavy crude makes sense because it secures revenues for America’s midstream industry.
Moreover, China and Russia are both active in the Venezuelan oil industry and the market to which it caters. China invested billions in Venezuelan production and is gearing several refineries to be major off-takers of Venezuelan crude. Russia is also a major producer of heavy oil. Therefore, cornering this market to put pressure on Russia and redirect flows away from China to the United States may give Washington leverage. In line with this reasoning, Trump – referencing the Monroe Doctrine – briefed oil industry executives about the intervention before informing the US Congress.
Changing Energy Markets
The Achilles heel of the United States venturing into Venezuelan oil is a changing global energy market. Oil consumption has likely plateaued and will enter structural decline over the next decades. Traditional drivers of demand – mobility and petrochemicals – will not come to the rescue. Electric vehicles are upending the automotive industry, not only in China but also increasingly in emerging markets in Latin America and Asia. Global pushback on oil-based plastics is growing. Fertilizer and drug industries are seeking innovative and cleaner solutions.
Oil markets turning soft – when sellers outnumber buyers, which drives prices down – will take its toll, primarily where production costs are high. In market environments in which a barrel of oil costs $100, Venezuelan crude makes a cut. At current prices, which are below $60 per barrel, this is less certain. An even more bearish scenario would price it out.
This presents a dilemma for the US agenda of energy dominance. In 2026, US oil companies will make investment decisions based on the market environment they expect for the next ten years. For them, sinking capital into Venezuelan oil may not be the smartest move. And it is their assessment that will determine whether Trump’s Venezuela bet will pay off.
The Security Risks of the Fossil Renaissance
If, against the odds, Venezuelan oil production flourishes under US occupation, a threat even larger than political upheaval and military interference looms: the cumulative effects of shocks from global warming, local environmental destruction, and resource conflicts.
The remaining carbon budget for staying below 1.5°C warming, the guardrail considered a safe operating space for humanity, is currently estimated at around 170 Gt of CO2. That estimate is associated with an only 50-percent likelihood of staying under the warming limit. Developed global oil reserves alone – excluding coal and gas reserves, as well as oil reserves that are discovered yet undeveloped – could release more than 300 Gt of CO2.
While Venezuela’s developed oil reserves are modest, at around 10.2 billion barrels, its proven reserves are almost thirty times higher. Much of this is a heavier oil, which emits almost four times more carbon during extraction and production than conventional oil. Developing and burning the known Venezuelan reserves would easily mean adding more than 100 Gt of CO2 to the atmosphere. Climate change and environmental degradation – which is already severe in the two oil producing regions Lake Maracaibo and the Orinoco belt – could cause public health and displacement crises in Venezuela and beyond to spiral.
Key Lessons for Germany at the Crossroads of Energy Policy
The intervention in Venezuela is a broad rejection of international law and coincides with the US withdrawal from global climate initiatives, thereby marking a crossroads for energy policy. The rule-based international order is now being undermined by one of its greatest profiteers.
The Trump administration is leveraging fossil resources to shape geopolitics and global markets coercively. Moreover, it is willing to reinforce this agenda through force – behavior that may also become a blueprint for adversaries of the United States and their hunt for resources. Yet, controlling Venezuelan reserves follows the 20th-century logic of energy dominance. It overlooks the 21st-century opportunities for energy security provided by renewables, which China is aggressively pursuing.
These are the main implications for German policy:
- Germany, an import dependent country, needs to hedge against possible adverse action from Washington, specifically for liquefied natural gas (LNG). Since 2022, Europe has shifted dependency by moving from Russian to US fuels. In 2024, the United States supplied 45 percent of the EU’s LNG, and this number has likely risen in 2025. US unilateral action is the new norm, also in energy. Consequently, Germany should diversify its LNG suppliers and work with countries like Canada, Egypt, and Senegal to this end.
- Germany needs to update the paradigms that underpin foreign trade, notably in energy. Market dominance has replaced free trade as the principle guiding US energy policy. This poses significant risk for import dependent countries. When revisiting its strategy, Germany must recognize that market forces alone may not be enough to ensure the country’s supply at affordable prices – and, by extension, its economic security.
- Germany should make accelerated efforts to further reduce the energy intensity in manufacturing and industrial production wherever possible to minimize exposure to external shocks. An ambitious industrial policy that focuses on the adoption of low carbon solutions is key here. Germany should make the most of pertinent EU initiatives such as the Clean Industrial Deal and stay committed to its climate neutrality goal.
- Regarding energy supply, Germany should speed up alternatives, particularly green molecules that are based on renewables and power-to-X (P2X) technologies such as hydrogen. The government should support building robust supply chains for the latter, including through determined green diplomacy efforts and clean transition partnerships.
- As a long-term strategy, Germany should weaken the investment case for high-carbon oil. To this end, it should seek alliances with climate-ambitious partner countries to accelerate decarbonization, thus containing demand growth or reducing demand for fossil fuels. Even against the backdrop of the US retreat from international agreements, global climate partnerships remain feasible.
- Germany should double down on renewable energies to escape the cycle of fossil dependency. “Cheap” renewables must not be seen as a silver bullet, however. China has subsidized production to create technological asymmetry and dependence. A degree of this is unavoidable, yet Germany can push to support technologies for which European production is still strong, such as offshore wind.
