With the apprehension of Venezuelan leader Nicolás Maduro in Caracas, the United States has effectively gained control over the world’s largest proven oil reserves, cutting off one of Beijing’s most important energy lifelines in the Western Hemisphere.

Just hours before his capture by the U.S. military, Maduro met with Chinese special envoy Qiu Xiaoqi, praising the “brotherly ties” between Caracas and Beijing. Those ties were built largely on oil. For years, most of Venezuela’s crude exports flowed to China, anchoring a relationship that mixed energy supply with debt, diplomacy, and political survival. That relationship unraveled quickly.

Within days of taking office, Maduro’s successor, Delcy Rodríguez, shifted to a more conciliatory tone toward Washington and invited cooperation with the United States on shared development goals. On Jan. 7, U.S. President Donald Trump announced that the Venezuelan interim authorities would transfer up to 50 million barrels of sanctioned oil to the United States.

Venezuela holds an estimated 303 billion barrels of proven oil reserves or about 17 percent of the global total, according to the U.S. Energy Information Administration (EIA). That exceeds Saudi Arabia’s 267 billion barrels and Iran’s 208 billion, based on data from World Population Review.

Yet years of mismanagement and sanctions have crushed production, which fell to about 1.1 million barrels per day in late 2025, down from roughly 3.5 million barrels per day in the late 1990s, according to International Strategic Action Network for Security.

Wall Street sees room for a rebound.

JPMorgan Chase, in a Jan. 8 report, estimated that under a new administration, output could rise to 1.3 million to 1.4 million barrels per day within two years.

Goldman Sachs analysts, in a Jan. 5 interview, projected that if production reaches 2 million barrels per day, global oil prices could fall by about $4 a barrel—a boost for U.S. consumers, but a deflationary shock for other producers.

Extra Heavy Crude

For Washington, the prize is not just volume, but quality. Much of Venezuela’s oil is heavy and extra-heavy crude concentrated in the eastern part of the country. This type of oil requires blending or specialized processing, but it is exactly what many U.S. refineries are designed to handle.

For years, American refiners have relied on heavy crude imports from Canada, Mexico, and Colombia to blend with domestic light oil to efficiently produce diesel and jet fuel.

Securing that supply fills a strategic gap, strengthens U.S. energy security, and gives Washington added leverage over other heavy-oil suppliers, including Canada and Mexico.

Beijing’s $60 Billion Black Hole

For Beijing, the outcome is bleak.

Over the past decade and a half, China acted as Venezuela’s lender of last resort, extending an estimated $60 billion in loans since 2007 through so-called “loans-for-oil” agreements, according to a Jan. 7 energy policy analysis published by Columbia University.

With the United States now directing Venezuela’s oil flows, China potentially faces a near-total loss on an estimated $10 billion to $12 billion in outstanding loans, the analysis suggests.

By 2023, roughly 68 percent of Venezuela’s oil exports were going to China, according to EIA data, with much of that oil used to service the debt.

The damage goes beyond sovereign loans.

Chinese state giants such as China National Petroleum Corporation (CNPC) and Sinopec hold legacy joint ventures and development rights, including stakes in projects such as Sinovensa, that involve billions of barrels in reserves. Their legal and commercial standing is now uncertain.

Private Chinese firms are also exposed. Companies such as China Concord Resources Corp., which announced plans last year for a $1 billion investment, along with Kerui Petroleum and Anhui Bhring Petroleum Group, recently signed contracts with Venezuela’s state oil company, PDVSA.

Those agreements are now likely close to worthless.

Independent “teapot” refineries in China, which depended on discounted Venezuelan crude, have also lost a key source of cheap feedstock.

US Oil Giants to Reenter

U.S. oil companies are preparing to reenter Venezuela.

Companies such as ConocoPhillips and Exxon Mobil have spent years pursuing arbitration claims in the tens of billions of dollars for assets expropriated under former leader Hugo Chávez.

In a Jan. 9 White House meeting with U.S. oil industry executives, Trump emphasized that boosting investment to rebuild Venezuela’s oil sector is a priority. He suggested that resolving longstanding legal and expropriation issues would be tied to broader engagement in revitalizing production, rather than focusing solely on past corporate claims.

During the meeting, Trump also said oil companies will invest at least $100 billion in Venezuela to rebuild its infrastructure to boost its oil output.

Taken together, the United States has secured access to the heavy crude its refineries need, undercut China’s energy and financial position in the Western Hemisphere, and potentially wiped out tens of billions of dollars the Chinese regime could use to exert influence in a single move.