The Impact of Developments in Venezuela on Azerbaijan’s Oil Revenues: What Do the Numbers Say?

Following the removal of Nicolás Maduro from power, real prospects have emerged for Venezuela — the country with the world’s largest proven oil reserves — to fully return to international oil markets, albeit under US supervision.

In 1997, Venezuela produced around 3 million barrels of oil per day. In subsequent years, however, output declined steadily and currently stands at approximately 1 million barrels per day. This figure represents about 1 percent of global daily oil production.

For comparison, Azerbaijan produces roughly 600,000 barrels of oil per day, accounting for about 0.7 percent of global output. At present, the three largest oil producers are the United States (14 million barrels per day), Saudi Arabia (11 million barrels per day), and Russia (10 million barrels per day).

As a result of sanctions and prolonged external pressure, Venezuela’s oil production fell to as low as 569,000 barrels per day in 2020. In the period that followed, production was gradually increased and brought back to around 1 million barrels per day. Notably, the partial recovery of the oil sector was overseen by Vice President Delcy Rodríguez, who currently serves as acting president and has demonstrated strong managerial capabilities in this field.

The U.S. government’s forceful removal of Nicolás Maduro has effectively brought Venezuela’s oil sector under U.S. influence and created conditions for American oil companies to return to the country. It should be recalled that after Hugo Chávez came to power in 1998, oil contracts were amended to require Venezuela’s national oil company, PDVSA, to hold a controlling stake. Exxon and ConocoPhillips rejected this condition and exited the country, while Chevron accepted the terms and continued operations. Approximately 240,000 barrels of oil produced daily by Chevron were primarily exported to the United States. A key feature of U.S.–Venezuela oil cooperation is that the main refineries capable of processing Venezuela’s heavy crude are located in the United States.

The key question for other oil-producing countries concerns the volume of additional oil Venezuela could bring to global markets and the potential timeline for this. Technical and economic data indicate that a rapid return of Venezuelan oil production to its previous level of 3 million barrels per day is unrealistic for two main reasons. First, the country’s oil infrastructure has significantly deteriorated after years under sanctions. Its modernization requires time, substantial investment, and advanced technologies.

Although reports indicate that American oil company executives showed limited enthusiasm during U.S. President Donald Trump’s meeting with them on January 9, 2026, available information suggests that five U.S. companies — three producers (Chevron, ExxonMobil, ConocoPhillips) and two service providers (Halliburton Company and SLB) — are expected to play a significant role in Venezuela’s oil sector.

However, a major obstacle to a large-scale return of Venezuelan oil to global markets using American capital lies in the structural characteristics of the U.S. domestic oil industry itself. Approximately 64 percent of U.S. oil production consists of hard-to-extract shale oil. The average production cost of one barrel of shale oil is around $60. Until shale producers secure alternative revenue sources, a decline in global oil prices could pose serious financial challenges for U.S. producers.

In addition, U.S. oil companies have begun producing higher-quality crude from newly discovered oil fields in Guyana since 2015, currently producing around 390,000 barrels per day. This volume is expected to exceed 1 million barrels per day by 2027.

Taking all these factors into account, as well as the continued presence of political forces in Venezuela aligned with Chávez’s ideology, it can be concluded that the primary objective of U.S. involvement in Venezuela is not ideological considerations or commercial interests, but rather preventing China from expanding its influence in the country and establishing strategic control over Venezuelan oil. 

Thus, a large-scale return of Venezuelan oil to the global market does not appear realistic before 2030. From this perspective, Venezuelan oil is likely to have only a minimal impact on Azerbaijan in the near term. On the other hand, it should be taken into account that there are many factors, in addition to Venezuela, that can influence prices in the global oil market.

The Daily Baku Editorial Team