The US’ recent military action against Venezuela suggests that 2026 is unlikely to be any calmer than the year just passed. The intervention creates further geopolitical uncertainty following a tumultuous 2025, and has exposed risks in the energy sector.
In a press note from 6 January, Wood Mackenzie said that the removal of Nicolás Maduro from Venezuela’s presidency creates near-term downside risk for oil prices while presenting longer-term uncertainties for upstream investment. Any easing of US sanctions could add barrels to an already oversupplied market, potentially driving Brent below the mid-to-high US$50/bbl levels predicted for 1Q26.1
President Trump has said that the US “will run” Venezuela until a “safe, proper and judicious transition” can be ensured, and has vowed to tap into the country’s vast oil reserves, indicating that US oil companies would fix Venezuela’s “broken infrastructure” and “start making money for the country.” However, there are significant doubts surrounding how quickly production could ramp up, with experts warning of huge challenges and enormous costs. Alan Gelder, SVP Refining, Chemicals and Oil Markets at Wood Mackenzie, recently commented: “Venezuela offers the scale major producers need, but the fundamentals work against rapid deployment. Heavy crude economics at current prices, unresolved legal claims, and political uncertainty create a risk profile that extends well beyond typical above-ground challenges. Companies will watch, but commitments require more than sanctions relief.”
Refiners on the US Gulf Coast could be the early winners. Their facilities – originally built to handle heavy crude from the likes of Venezuela and Mexico, before the US shale revolution – are well positioned to welcome shipments once sanctions are lifted and import permits are granted. On Monday 5 January, two days after the US strikes on Venezuela, shares in America’s top refining groups jumped. Valero Energy – the biggest importer of Venezuelan crude – closed 9% higher, while Phillips 66 added 7% and Marathon Petroleum 6%.2
However, Wood Mackenzie warns that a return to historical refinery throughput and product export levels poses risk to Atlantic Basin refiners – particularly in Europe – given the competitive positioning that Venezuelan refineries once held.
Developments in Latin America are just one of the many factors shaping the year ahead. In this month’s keynote article, Wood Mackenzie’s Alan Gelder shares his outlook for the downstream sector in 2026 and highlights several key issues likely to influence the market. Although his article was prepared prior to the US’ recent actions in Venezuela, Alan accurately identifies the brewing conflict as a critical consideration to keep an eye on, alongside the country’s policies towards Iran. Global economic growth, OPEC+ behaviour, and the Russia/Ukraine conflict also feature prominently among the many things to watch out for in the year ahead. Turn to page 8 to read Alan’s thoughts in full.
References
- ‘What the Venezuela regime change means for oil production, crude and product markets’, Wood Mackenzie, (6 January 2026).
- MCCORMICK, M., ‘US oil refiners gear up for comeback of Venezuelan crude’, Financial Times, (5 January 2026).
