A Show of Force in the Western Hemisphere: Reactions from the American Political System and Impact on our Energy Sector
The dramatic events of January 2026 have fundamentally reshaped the geopolitical landscape of the Western Hemisphere. With the execution of "Operation Absolute Resolve," the United States has transitioned from a policy of diplomatic pressure and sanctions to direct military intervention in Venezuela. The capture of Nicolás Maduro represents a definitive strike against drug kingpins and is a profound statement about U.S. intervention policy, but the resulting political fallout in Washington and the complex economic realities of the global energy market suggest that the "long game" for Venezuela has only just begun.
A Nighttime Raid and the Political Aftermath
In the early hours of Saturday, January 3, U.S. special operations forces launched an extraction mission targeting Maduro’s compound in Caracas. Supported by the largest naval presence in the Caribbean since the Cuban Missile Crisis, American forces disabled air defenses and took Maduro and his wife, Cilia Flores, into custody. By Monday, January 5, the pair had pleaded not guilty in a New York federal court to charges of narco-terrorism, cocaine trafficking, and weapons offenses.
While the administration framed the raid as a triumph of law enforcement and national defense, the domestic political reaction was swift and fractured. In the Senate, a bipartisan coalition moved to check the President’s authority. On Thursday, January 8, the Senate voted 52-47 to advance a war powers resolution led by Senator Tim Kaine (D-Va.), which seeks to block further military action within Venezuela without prior congressional authorization.
The vote was a rare instance of public defiance from within the President's own party. Five Republicans – Sens. Susan Collins (ME), Lisa Murkowski (AK), Rand Paul (KY), Todd Young (IN), and Josh Hawley (MO) – joined all 47 Democrats in advancing the measure. The President responded with characteristic furor, labeling the dissenters’ actions as "stupidity" and declaring on social media that they "should never be elected to office again". This internal GOP rift comes at a sensitive time, as Republicans face a difficult midterm election cycle where maintaining a Senate majority is far from guaranteed. While the resolution still faces potential House action and a certain presidential veto, it serves as a significant "warning shot" regarding the limits of executive power in "nation-building" scenarios.
The Strategic Imperative: Beyond the Prize of Crude
The administration’s justification for "Operation Absolute Resolve" rests on what officials call the "Trump Corollary" to the Monroe Doctrine – an assertion of Washington’s right to exclude "non-Hemispheric competitors" from the region. While oil is the most visible prize, the intervention was driven by a convergence of security concerns:
Narco-Terrorism and Gang Activity: Federal indictments allege that the Maduro regime operated as a hub for narcotics trafficking and weapons proliferation, directly impacting U.S. border security and public safety.
The Cuban Connection: For decades, Venezuela has been the primary economic lifeline for the communist government in Cuba, providing deeply discounted oil in exchange for intelligence and security personnel. Removing Maduro is seen as a direct way to destabilize the Cuban regime, which Trump has signaled is "ready to fall".
Great-Power Rivalry: A primary driver for the intervention was the increasing influence of China and Russia in South America. China has relied on discounted Venezuelan crude and has deeply penetrated Latin American markets, while Russia has used the country as a strategic outpost. The administration has explicitly signaled that in the "new Venezuela," Beijing and Moscow will no longer be welcome.
Oil Matters, But It Isn't Everything
The President has been unabashed about the economic motivations of the raid, famously stating, "To the victor belong the spoils... Take the oil". However, the reality of "getting the oil flowing" is far more complicated than the administration’s rhetoric suggests.
The Shambles of Infrastructure
Venezuela possesses the world’s largest proven oil reserves, yet its production collapsed from 3 million barrels per day (b/d) in the early 2000s to roughly 900,000 b/d by 2025. Decades of mismanagement, corruption, and "chronic underinvestment" have left the industry in ruins. Experts estimate it will cost roughly $100 billion and take a decade of work to restore production to its former glory.1 The US refinery industry was rebuilt before the shale oil revolution to really run on this heavier crude although some have been switching. The new oil shale crude is lighter crude and more valuable so US producers prefer it to go to refineries in the world market that can best use that crude. So, it is desirable for US refineries to have an affordable source of heavier crude.
Another critical challenge is the deeply degraded state of Venezuela’s oil infrastructure. Recent satellite data show vast plumes of methane from abandoned rigs, corroded pipelines and other dilapidated energy facilities, underscoring the scale of physical decay across the sector. According to recent analyses, roughly 13 billion cubic meters of Venezuelan natural gas are flared, vented or leaked into the atmosphere annually, equating to about $1.4 billion in lost potential revenue.2 Satellite-based studies also show Venezuela’s gas loss rate is among the highest in the world – roughly a quarter of total gas output – far above the global average.3 This lost gas is significant not only economically but climatically: methane is a potent greenhouse gas, trapping about 80 times more heat in the atmosphere than carbon dioxide over a 20-year period.
These emissions represent real economic loss and raise red flags for potential investors. Methane leakage and flaring not only waste billions of dollars in associated gas that could otherwise generate revenue, they also highlight the extensive reinvestment and modernization required before oil production can be sustainably scaled up.
The President has been calling on the oil industry especially the service industry sector to consider investing back in Venezuela to address these issues suggesting the US might provide incentives.
For U.S. oil majors weighing entry into Venezuela, the prospect of operating amid such worn-out infrastructure – with significant “above-ground” risks from decay, spills and maintenance shortfalls – could temper enthusiasm, potentially opening the door for smaller, less experienced firms or private equity players to take on the lion’s share of rebuilding efforts tied to President Donald Trump’s plan to revive the country’s heavy crude output.
The Domestic Dilemma: US Shale vs. Venezuelan Crude
Paradoxically, the President’s goal of increasing supplies in the market of Venezuelan oil to lower prices could be "harmful" to the American oil and gas sector.
Price Pressure: Current oil prices are around $56 a barrel, which is already dangerously low for many domestic U.S. producers. If Venezuelan production successfully ramps up and pushes prices lower, it could make domestic drilling in U.S. shale basins unprofitable.
Investment Risk: Major U.S. players like Exxon and ConocoPhillips remain wary. They have been "burned before" by nationalizations in 1976 and 2007 and are seeking financial guarantees from the U.S. government before committing tens of billions of dollars to a country that lacks political stability.4
A Hedge for the Future
Despite these risks, the administration views Venezuela as a vital "hedge for the future". While the U.S. is currently the world’s top supplier, growth in shale production is nearing its peak and is expected to plateau soon. By 2030 and 2040, as other fast-growing producers like Canada and Brazil begin to decline, the world will need a "Western Hemisphere counterbalance" to Saudi Arabian dominance. In this view, Venezuela isn't a short-term fix for gasoline prices but a multi-decade strategic asset.
The Uncertain Transition
As of this week, the "makeshift regime" in Caracas is led by Acting President Delcy Rodríguez, Maduro’s former Vice President. While she has publicly called for "cooperation" and "respectful international relations," she has also balked at the idea of the U.S. "running" the country, stating, "There is no external agent governing Venezuela".
The U.S. remains in a position of "large leverage," maintaining a naval embargo and control over oil revenues. However, as critics have pointed out, removing a dictator is not the same as removing a system. Power in Venezuela still rests with "networks of fixers and generals," and the transition to a "safe, proper and judicious" government remains a distant and uncertain goal.
The intervention in Venezuela may have set a marker for the President in his new corollary to the Monroe doctrine, but it has now entered the "long grind" of nation-building, market stabilization, and constitutional confrontation that could define the remainder of his term.
Bibliography
1) Wood Mackenzie. “What Could Change in Venezuela Mean for Oil Production?” Energy Pulse. https://www.woodmac.com/blogs/energy-pulse/what-could-change-in-venezuela-mean-for-oil-production/.
2) Americas Quarterly. “Venezuela: The Post-Maduro Oil, Gas and Mining Outlook.” https://www.americasquarterly.org/article/venezuela-the-post-maduro-oil-gas-and-mining-outlook/.
3) Bloomberg Government, “Venezuela Has the Most Methane Intensive Oil in the World” ,” https://www.bgov.com/news/T8LQ9SKIUPTZ.
4) Exxon Mobil Corporation. “Our Perspective Regarding the Situation in Venezuela.” News release, 2026. https://corporate.exxonmobil.com/news/news-releases/2026/our-perspective-regarding-the-situation-in-venezuela.
