In a conversation with the members of the Inter-American Dialogue’s Presidential Leadership Council, Dr. Francisco Monaldi examined how Venezuela’s oil sector is likely to evolve under the emerging arrangement between the Trump administration and Venezuela’s interim government. Monaldi argued that U.S. policy is settling into a pragmatic, transactional framework in which oil plays a central role. While sanctions and enforcement mechanisms will remain in place to prevent unauthorized exports, licensed production and exports, primarily to the United States, are expected to expand. The U.S. Gulf Coast has the capacity to absorb Venezuelan crude, and U.S. refiners have a clear appetite for it.
Monaldi outlined how licensed exports could gradually rise as inventories currently stored onshore and at sea are absorbed into the market. While most exports are expected to flow to the United States, some flexibility may emerge, allowing limited shipments to Europe or Asia depending on demand conditions. The resumption of oil flows would also allow the United States to export refined products and diluents to Venezuela, critical for processing extra-heavy crude, providing a boost to U.S. refiners and modest benefits for consumers. Overall, he estimated that near-term production gains could reach 300,000—400,000 barrels per day over 18–24 months, enough to support a modest economic rebound in Venezuela but not to materially affect global oil markets.
The discussion also explored investment prospects and constraints. Chevron is positioned to lead any production increase, given its existing operations and ability to reinvest cash flow with limited additional risk. Other European firms, including Repsol, Maurel & Prom, and Eni, could follow, alongside smaller short-cycle projects that rely on incremental production rather than large, long-term commitments. However, Monaldi emphasized that legal uncertainty, weak institutions, and political risk will continue to deter major investments. A sustained expansion of Venezuela’s oil sector would require a democratic transition, a credible legal framework, long-term sanctions stability, and broad political consensus inside Venezuela.
Participants raised questions about how oil revenues would be managed, particularly given the limited capacity of the U.S. government to administer from afar. Monaldi suggested that some revenues would inevitably need to flow to the Venezuelan state to keep basic functions running, while others could be directed toward humanitarian needs, imports, and infrastructure. The electricity sector was repeatedly cited as a priority. Comparisons to past international oil-for-food arrangements underscored both the risks of corruption and the complexity of implementation without robust on-the-ground capacity.
Finally, the conversation addressed political and security risks. Monaldi argued that while the current arrangement may stabilize the oil sector in the short term, it does not resolve deeper questions about democratic transition, amnesty, or security for foreign personnel operating in Venezuela. Without institutional reform and political legitimacy, he warned, any recovery will remain fragile and vulnerable to backlash, both inside Venezuela and across the region.
This event was by invitation only.
