US warships are circling Venezuela – what does this mean for the oil trade?

As US destroyers closed in on the coast of Venezuela on Thursday – a stark show of military force President Donald Trump said was intended to combat drug cartels – global attention has turned to the South American country, with China voicing opposition to “the interference of external forces in Venezuela’s internal affairs, under any pretext”.

Here, the Post examines how the situation has developed and Venezuela’s role in the international oil trade – a prominence that has given the conflict global scope.

How big are Venezuela’s oil reserves, and how much does it produce?

Venezuela holds the world’s largest proven crude oil reserves, estimated at around 303 billion barrels as of 2023, according to the US Energy Information Administration. This would account for 17 per cent of global reserves, with the vast majority of Venezuela’s stock located in the Orinoco Belt river basin.

However, that year it only produced 0.8 per cent of global crude, hampered by US sanctions active since 2019 on Petroleos de Venezuela SA (PDVSA) – the state company with near-monopoly status in the refining and extraction of petroleum and natural gas.

PDVSA has not published statistics for its activity since 2016, but Reuters reported in July that the firm’s crude oil and fuel exports increased by 15 per cent year on year in 2024.

What is the status of China-Venezuela relations?

China has poured about US$67 billion into Venezuela since 2007, far more investment than any other South American country, making it Caracas’s most important creditor and a financial lifeline after the imposition of harsh sanctions limiting its ability to trade.

South China Morning Post