Market News

BY Nicholas Lua

(Bloomberg) -- The scope for higher Venezuelan oil output in the long run after the US’s capture of the nation’s leader may eventually pressure global crude prices, according to Goldman Sachs Group Inc.

At the weekend, the US stunned the world by attacking the South American nation, seizing Nicolás Maduro, and saying that it was going to “run” the country. While Venezuela was once an oil-producing powerhouse, output has declined precipitously over the past two decades.

Any recovery “would likely be gradual and partial as the infrastructure is degraded and would require strong incentives for substantial upstream investment,” analysts including Daan Struyven said in a note on Sunday.

The bank left average-price forecasts for this year unchanged at $56 a barrel for Brent and $52 for West Texas Intermediate. Futures declined at the open on Monday, with Brent trading slightly lower near $61 a barrel.

“Along with recent Russia and US production beats, potentially higher long-run Venezuela production further increases the downside risks to our oil price forecast for 2027 and beyond,” they said.

After the seizure of Maduro, President Donald Trump said US companies would spend billions of dollars to rebuild Venezuela’s crumbling energy infrastructure, describing an ambitious vision to use US financial resources and industry knowhow to restore the nation’s oil sector to its former glory.

Venezuela holds the world’s largest proven oil reserves and, at its peak in the mid-2000s, it produced about 3 million barrels a day, according to Goldman. Last November, output was seen at 930,000 barrels a day, and it may have declined further since then after reports of shut-ins, the bank said.

In the run-up to the seizure of Maduro, the US imposed a partial blockade of tankers calling at Venezuela, prompting local storage tanks to fill.

(Adds output estimate in penultimate paragraph)