Oil Prices Plunge as US Gains Control of Venezuela's Vast Reserves
The capture of President Maduro has rattled energy markets with the prospect of the world's largest oil reserves returning to full production, threatening a global supply glut.
Crude oil benchmarks collapsed in Tuesday trading after the U.S. announced it had captured Venezuelan President Nicolás Maduro and would temporarily manage the nation's vast oil reserves, sending shockwaves through the energy sector.
West Texas Intermediate (WTI) futures plunged over 9% to fall below $70 a barrel, while the global benchmark, Brent crude, saw a similar decline. The move came after U.S. officials confirmed the stunning geopolitical development, with President Trump stating the U.S. would take a direct role in stabilizing the country, according to live updates from CBS News.
The prospect of Venezuela's enormous—and largely untapped—oil supplies returning to the global market sparked a sell-off across the energy complex. Shares of oil supermajors were hit hard, with Exxon Mobil Corp (NYSE: XOM) and Chevron Corp (NYSE: CVX) both trading down more than 6% on the news.
For years, the oil market has operated with the understanding that Venezuela's production was effectively offline. The country sits on an estimated 303 billion barrels of proven reserves, the largest in the world. Yet, due to years of mismanagement, corruption, and crippling U.S. sanctions, its output cratered from a peak of over 3 million barrels per day in the late 1990s to roughly 800,000 in recent months. The market is now pricing in a dramatic reversal.
"The market is reacting to a paradigm shift," one energy strategist noted. "The question is no longer about if OPEC+ can constrain supply, but how the world will absorb a potential tidal wave of new oil from Venezuela."
The development poses a direct challenge to the OPEC+ coalition, led by Saudi Arabia and Russia, which has struggled to prop up prices through coordinated production cuts. The prospect of millions of barrels of non-OPEC Venezuelan oil hitting the market could undermine the group's pricing power and trigger a battle for market share.
Traders are now fleeing oil and turning to safe havens and defense stocks, signaling a significant risk-off shift in sentiment. While analysts caution that restoring Venezuela's crumbling energy infrastructure will require years of work and billions in investment, the market is forward-looking. The immediate reaction reflects a fundamental repricing of long-term supply expectations, spelling a potentially extended period of pain for oil producers who have been navigating a volatile market.