Misreading the Room
If Greenland is the appetizer, might Maduro’s Venezuela be the main course?
“You have to think anyway, so why not think big?” – Donald Trump
On December 14, 1922, the Barroso No. 2 well at La Rosa field in Venezuela erupted, spouting a thunderous geyser of oil into the sky. Estimates pegged the early flows at an incredible 100,000 barrels per day, and a mad dash to develop the country’s rich hydrocarbon deposits swiftly followed. Within a few years, Venezuela had become the world’s leading exporter of crude, bringing enormous sums of foreign money into the country. Venezuela became the third largest oil producer in the world, behind only the US and the USSR, a position held until 1970 when it was surpassed by Saudi Arabia and Iran.
For quite a while, Venezuela handled its newfound wealth well. During the country’s golden era—a period spanning from the 1950s to the 1980s—it was the wealthiest nation in Latin America and developed a vibrant middle class. Unfortunately, Venezuela eventually devolved into a well-documented “case study in the perils of becoming a petrostate.” Decades of graft, mismanagement, and political upheaval left the country dangerously dependent on global oil prices, allowing the rise of Hugo Chávez in the late 1990s to metastasize into a cataclysmic economic implosion. Under Chávez’s handpicked successor, current President Nicolás Maduro, Venezuela experienced a historic bout of hyperinflation, peaking just above 344,000% in February of 2019.
Venezuela’s oil production has fallen by more than 80% from its zenith, with Bloomberg data indicating that the country ended 2024 producing just 850,000 barrels per day. As the holder of the world's largest crude oil reserves, Venezuela is one of the most promising sources of incremental energy supply. It is located within easy shipping distance to the US Gulf Coast and produces grades ideal for US refineries. The country would seem a tempting target for an incoming US president in search of strategic assets to acquire across the Western Hemisphere.
Were we in Maduro’s position, keeping a low profile would be among our top priorities, especially in light of the country’s recent disputed election. The Biden administration recognized Maduro’s opponent, Edmundo González, as the legitimate winner of the contest, reimposed sanctions, and placed a $25 million bounty for information leading to Maduro’s arrest on narcotics charges. Alas, Maduro has taken a decidedly different approach:
“Venezuela’s President Nicolás Maduro over the weekend made controversial statements proposing to ‘liberate’ Puerto Rico using Brazilian troops. In reference to United States President-elect Donald Trump’s controversial comments about taking control of the Panama Canal, Greenland and Canada, Maduro said, ‘Just as the North has an agenda of colonization, we have an agenda of liberation.’
Speaking at the closure of the ‘International Anti-Fascist Festival’ hosted in Caracas, the authoritarian leader affirmed that the ‘freedom of Puerto Rico is pending, and we will achieve it with Brazilian troops.’”
While a hot war in the Caribbean might seem preposterous, Maduro’s bellicosity toward Puerto Rico is just one in a series of provocative actions he has taken as his grip on power grows more precarious. With neighboring Guyana quickly becoming one of the most important sources of oil production growth in the world—exploiting the very resources Venezuela has long claimed to be its own—the situation is a tinderbox waiting for a match. Let’s game the probabilities of one being lit.