US Energy Strategy Analyzed

Key Points

• US invaded Venezuela to gain control of massive oil reserves (303 billion barrels).
• Venezuela’s oil production could jump to 1 million bpd within two years.
• Opec+ paused supply increases due to US intervention and a projected global surplus.
• China remains a major oil importer (600,000-700,000 bpd) from Venezuela.
• EV sales are booming, especially in China, reducing oil demand significantly.
• Global oil supply is expected to exceed demand, pushing prices downwards.

The United States started the year with a surprising move: launching “Operation Absolute Resolve” to take control of Venezuela. This involved sending in the military and ultimately capturing President Nicolás Maduro. This action has created a big change in how oil is produced and sold around the world.

Venezuela has the largest collection of oil reserves – a staggering 303 billion barrels. The US wants to use all of this oil. This means they could start selling Venezuela’s oil to countries in the West, like the United States, instead of mostly to China.

Normally, a group called Opec+ tries to control how much oil gets produced. They make rules to keep oil prices steady. However, because the US is now involved, Opec+ has had to stop increasing oil production. This is because the US could add a huge amount of oil to the market, making it much cheaper.

Venezuela currently produces about 800,000 to 900,000 barrels of oil each day. Experts believe, if the US lifts some of the rules and restrictions, Venezuela could produce up to 1 million barrels a day within two years. This extra oil is called a “super glut,” and it’s already making a difference.

Oil prices went up a little bit at first when Opec+ said they wouldn’t increase production. However, prices started to fall because Saudi Arabia, a major oil producer, cut the price of its oil. Refineries, which turn oil into gasoline, aren’t buying as much oil as they used to because of the lower prices.

China has been a long-time friend of Venezuela and buys a lot of its oil. For years, Venezuela has been China’s main source of oil, bypassing rules set by the US. Now, President Trump wants to send 30-50 million barrels of Venezuelan oil to refineries in the US Gulf Coast, which could change China’s plans. Companies called “teapot” refineries in China are designed to handle Venezuela’s heavy oil.

Opec+ made a decision in January 2026 to continue pausing oil production until the first three months of 2026. They’re worried about a lot of oil being produced and a global surplus. They had to reduce oil production in November 2025 to try and keep prices stable.

Many countries in Asia, like India and China, are still buying a lot of oil. These countries make up more than a fifth of the world’s oil demand. If demand goes down in these countries, it will affect oil prices.

Electric cars are becoming very popular, especially in China. This is called the “demand erosion” phase. Because of this, less people are buying gasoline-powered cars. This is lowering the amount of oil people use.

By the start of 2026, almost a quarter of all new cars sold are electric. In China, more than half of new cars are electric! A company called BYD is the biggest EV maker in the world, and Tesla is selling fewer cars now. EVs are using up a lot of oil, with some estimates saying they’re using 1.3 million barrels of oil per day.

The International Energy Agency (IEA) says that in 2024, EVs displaced 1.3 million barrels of oil per day. By 2030, this number could reach 5.4 million barrels of oil per day. This is a huge change – Chinese gasoline demand fell 6% in late 2025, showing that transportation oil use is likely at its peak.

We expect the global oil market to have too much oil for a while, keeping prices down. Our forecast shows that the price of WTI (West Texas Intermediate) oil will fall to $48 by 2026, down from $52.

The world’s energy game is changing, and the US is now a major player.