Caracas: The recent developments in Venezuela, notably the capture of President Nicolas Maduro and his wife and their subsequent transfer to New York following a US military operation, have marked a new test for the sensitivity of global energy markets toward countries with significant oil wealth. This situation is influencing how these markets envision future energy supply capabilities.
According to Qatar News Agency, economist Dr. Abdullah Al Khater indicated that these incidents will have a very limited impact on the global oil markets directly related to the events. He clarified that energy prices quickly adjust to new realities. The real factors affecting global oil markets are trends in economic growth, as Venezuela's energy sector will require time for restructuring and determining its capacity to supply global markets.
Dr. Omar Khlaif Gharaibeh, Associate Professor and Vice Dean for Academic and Quality Affairs at the College of Business, Al 'alBayt University in Jordan, affirmed to Qatar News Agency that Venezuela presents a unique case in the global oil economy. Despite holding around 303 billion barrels, approximately 20 percent of global reserves, Venezuela is no longer considered a direct productive force in the market. Instead, it is seen as a long-term geopolitical risk factor.
Dr. Gharaibeh noted that Venezuela's return to the oil scene comes amidst a complex global environment, including uneven economic slowdowns in major economies, projected supply surpluses, and shifts in global energy demand. The critical question is not the volume of Venezuelan energy reserves, but the time and cost required to convert this into exportable barrels, and the ability of Caracas's political and economic systems to provide stability and investment conditions.
The expectation of a swift return of Venezuelan energy production is unrealistic, as elevating production to about two million barrels daily could require approximately USD 58 billion in investments and a timeframe of two to five years. Returning to historical peak levels may need a decade of investments in infrastructure and technology, along with institutional reforms.
Dr. Gharaibeh emphasized that recent developments in the oil market should be assessed through scenario analyses linking politics, investment, and energy. Venezuela's past two decades show that oil reserves alone cannot drive market force without effective institutions and stable partnerships.
He outlined three scenarios for Venezuela's future: persistent political turmoil, eventual recovery post-stabilization, and lasting political stability with international partnerships. Each scenario presents different production potentials, from stagnant supplies to reaching 3 million barrels per day or more in the medium term.
Dr. Gharaibeh concluded that while the oil market remains sensitive to geopolitical shocks, its true impact is measured by a country's production capabilities rather than reserve sizes. For Venezuela, it remains more of a risk factor than a balancing force in the short term, with long-term investment opportunities dependent on overcoming its current challenges.