In the final days of his reign, Venezuela’s controversial leader, Nicolás Maduro, took to national television. He pledged that by 2026, Venezuela would diversify its economy away from its traditional oil dependency. Yet, within mere days, a dramatic U.S. intervention had displaced him. As a result, Venezuela continued its oil-centric trajectory, a path so entrenched in its identity that gasoline often costs less than bottled water. For more information about [Venezuela](https://www.bbc.co.uk/news/topics/clvj0wn64pdt/venezuela), visit BBC News.
The removal of Maduro has opened doors for potential wealth creation, as U.S. President Donald Trump stated. With U.S. sanctions partly lifted and calls for oil majors to flood Venezuela’s industry with investments, the future seemed optimistic for Americans, Venezuelans, and Big Oil alike. But as always, reality is often more nuanced.
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Why We Wrote This
Trump, alongside interim President Delcy Rodríguez, is banking heavily on oil to secure political gains. However, the Venezuelan people yearn for more than economic relief—they seek quality living standards.
On January 29, interim President Rodríguez presented an ambitious reform of the hydrocarbons sector. This move, designed to attract foreign investments, arrived just as certain U.S. sanctions were lifted. There’s hope that Venezuelan oil revenue might surpass expectations by 2025’s close. Experts, however, caution that genuine improvement demands more than economic juggling. [Transparency International](https://www.transparency.org/en/countries/venezuela) highlights the need for democratic enhancement and humanitarian focus.
“The populace desires a revamped status quo,” says Giorgio Cunto Morales, an economist at Andrés Bello Catholic University. While oil revenue might moderate inflation and revamp public services, it’s not a quick fix. Political transformation remains vital for enduring change.
Food still costly amidst change
Years of Venezuela grappling with astronomical inflation rendered basic goods unaffordable. Since 2013, the nation’s GDP has plummeted over 70% under Maduro, a collapse unparalleled in any non-war-torn Western Hemisphere country. For insights into this economic turmoil, explore [The Economist](https://www.economist.com/venezuela).
In January, Rodríguez announced a $300 million windfall from initial U.S.-supervised oil sales. These funds, she claimed, would bolster citizen wages and counter inflation. Despite visible optimism, the cost of living, such as food prices, remains stubbornly high. Many speak of hope, hinting at potential improvement, but patience is essential.
Since early January, Trump has urged U.S. oil giants to pour $100 billion into Venezuela’s rich reserves. In January alone, Venezuelan oil imports into the U.S. peaked, surpassing December 2024 figures. However, caution prevails. One oil firm remarked to Trump that without democratic reforms, Venezuela remains “uninvestable”.
Venezuela nationalized oil in the 1970s. Under Chávez, foreign companies encountered bureaucracy, leading some to exit without compensation. This legacy deters significant investments today. January reforms hint at progress, rolling back stringent regulations of yore. For detailed analysis, see [Energy Institute](https://www.energy.utexas.edu/).
“The head of the snake is gone, but the body lingers,” quips Jorge Piñon of the University of Texas. Investment risks persist due to fluctuating leadership and policies. Trump’s administration highlighted how nefarious activities, potentially linked to oil sales, complicate business dealings.
“PDVSA is Latin America’s most corrupt state entity,” notes Matteson Ellis of Miller & Chevalier. Navigating this landscape means negotiating with PDVSA while bracing for potential extortion or bribery requests.
Beyond economics: a quest for change
A Premise poll for The Economist reveals only 13% of Venezuelans opposing the U.S. coup against Maduro. Maduro’s tenure, coinciding with global oil dips, plunged the economy, prompting authoritarian tactics, including imprisoning foes and restricting freedoms.
While the exchange rate disparities have eased post-Maduro, the economic plight persists. However, a “window of opportunity” emerges for political evolution. Roughly 70% of respondents anticipated economic betterment by 2027, with an even larger majority expecting political progress.
Cunto Morales warns of conflicting priorities. The U.S. seeks stability and economic ties, whereas Venezuela’s leadership, rooted in Chávez’s legacy, clings to power by alleviating economic strains.
“Without freedom and democracy,” argues a human rights advocate, “economic reforms lose significance.” Rodríguez’s recent closure of a notorious detention center and proposed amnesty legislation signal openings for political reform. Immediate action is crucial.
