If you do too much oil, Maduro\'s arrest is not good news

When geopolitical emergencies occur, the market\'s first reaction is often counter-intuitive. As the news of Maduro\'s arrest broke, the risk of conflict that was originally regarded as \"bullish oil prices\" did not materialize, but caught crude oil bulls unprepared. Data showed that U.S. oil and Brunei oil fell instead of rising after the news was announced. The market began to reassess the possibility of restoring Venezuelan crude oil supply, loosening of sanctions and the return of alternative production capacity. Compared with emotion-driven risk-aversion logic, funds are obviously more concerned about medium-and long-term supply expectations-if you are doing more oil, this is obviously not good news.

Dictator Nicolás Maduro, the bus driver turned dictator leader, led to the deaths of tens of thousands of people, the exile of 8 million people, and the oppression of 34 million people. The root cause of all this mainly comes from the curse of oil wealth, corruption and the \"hotbed of collectivism.\" Yes, the resource curse does exist.

Today, the U.S. government announced that it had successfully arrested Maduro in a special military operation. Maduro and his wife have reportedly been transported from Caracas to the United States and are currently detained in an undisclosed location with plans to prosecute them in New York on charges of \"drug terrorism\" and \"drug smuggling.\"

So, what will happen next? We don\'t know yet. But if Trump decides to take back U.S. oil assets expropriated by the Venezuelan government, or even temporarily take over the country to rebuild its institutions, I fully support it. If you are willing to think deeply, you should also support it.

Why do you say that? Because for decades, Venezuela\'s elite has proved that they cannot escape the \"resource curse\" dilemma. Such a policy will not only benefit mankind and freedom, but also be a blessing for peace. Why do you think so?

The reason is that Venezuela is not just an ordinary member of OPEC, as can be seen from my OPEC production table below. (Note: The actions of Trump and the U.S. government mentioned here are hypothetical discussions and not facts. Please pay attention to the distinction.)

Chart: OPEC oil production (excluding natural gas condensate)

Source: Burggraben analysis; multi-party data

In fact, Venezuela has the world\'s largest oil reserves, and the quality of its conventional oil is comparable to that of Saudi Arabia. In other words, it has the same potential to have a significant impact on global oil prices as Saudi Arabia does. In general, lower oil prices (which is exactly what Trump wants) are often seen as a boon for peace and prosperity.

Before delving into geological conditions and oil production, let\'s return to basics. In my personal humble opinion (I am Swiss, not an American voter), Trump is correct that \"U.S. oil assets should be returned to their legitimate U.S. owners.\" This is obviously his position. So yes, this intervention is not just about drugs, it is also closely related to oil, and I fully support that position.

As a resource investor, I am tired of seeing dictators and regimes around the world plunder Western assets without reasonable compensation, while Western leaders either turn a blind eye or hide behind procedures and polite statements.

We should not reward corrupt leaders, now or in the future. We should firmly uphold the rule of law when the interests of Western companies are infringed upon. Even if you disagree with me (which is entirely fine), as a resource investor, you should be relieved that Trump may have reduced the ground risk of all commodities in emerging markets to some extent, at least in the short term.

In any case, Venezuela has the world\'s largest oil reserves, a large portion of which originally belonged to Western companies that discovered and developed these reserves. These companies not only developed some resources, but also paid due taxes to the host country.

The Orinoco Belt alone represents the largest oil accumulation on earth, with an average estimated volume of technically recoverable heavy oil of approximately 513 billion barrels. In terms of reserves, that is, the economically proven recoverable portion, Venezuela accounts for approximately 20% of the world\'s known reserves.

However, in a market with total oil demand of approximately 85 million barrels per day (note that this does not include total liquid fuel production of approximately 103 million barrels per day), Venezuela\'s oil production accounts for only 1%.

Ladies and gentlemen, this is the consequence of socialism and corruption.

Under Maduro\'s rule, people even died on the streets due to hunger for years. Make sure to keep this in mind next time someone sells us the \"warmth of collectivism.\"

It should be noted that there is an incentive for OPEC\'s oil reserve data to be exaggerated because these data determine its production quotas. This is why every senior geologist will tell you that, for example, the heavy oil reserves data in Kuwait are overestimated.

However, if you look closely at the U.S. Geological Survey (USGS) report, it is unlikely that Venezuela\'s heavy oil resources will be overstated.

Even though the moderate viscosity of the Orinoco oil belt may halve the final recoverable volume, it is highly likely that other resources will be found elsewhere, including offshore areas of Venezuela (such as neighboring Guyana).

Therefore, this is a huge \"cake\" from any perspective and is likely to achieve considerable production growth in the long run.

Chart: Global Oil Reserves

If the U.S. oil industry and the global oil services industry are allowed to develop this \"treasure,\" Venezuela will surpass Saudi Arabia\'s production in the next decade.

Mark my words and I will tell you now.

The regularity and richness of these fields is so high that once today\'s oil industry\'s advanced technologies are fully applied to these reserves, their potential will be incalculable.

American entrepreneurship has squeezed 9.8 million barrels of oil a day from hard shale.

Venezuela\'s oil resources are like a swimming pool the size of Texas filled with oil, just waiting to be mined, piped and utilized. This is the last virgin land of oil wealth.

Picture: Geological Map of Venezuela\'s Petroleum Resources

The growth of oil production will bring boon to all aspects of Venezuela: huge tax revenue, high-paying jobs, and explosive growth in related service industries-from oil services to construction, from leisure and entertainment to hotel catering, a complete ecosystem will be formed.

Imagine a prosperous Texas, but on a larger scale.

The left might describe it as \"colonialism.\" But as Texas and Norway have shown, this is called capitalism.

Capitalism works well in environments with sound institutions, but is difficult to operate in emerging markets without effective institutions.

This is a fact, and you can quote me anytime, anywhere.

Chart: Changes in Venezuela\'s oil production since 1965 (units: thousands of barrels per day)

Source: Bloomberg

Under the right conditions, Venezuela\'s oil production can rise rapidly, and even a \"small\" increase will have a huge impact in commodity markets determined by marginal prices.

Currently, Venezuela\'s oil production is about 900,000 barrels per day. If the property rights system and the rules of the game can be repaired, increasing production to 1.5 million barrels per day within 18 months is a realistic preliminary goal. This growth will be led by the international oil majors with the most experience, financial strength and the largest outstanding claims, including Chevron, ConocoPhillips, Exxon, and possibly Shell and ENI of Italy.

These companies have suffered losses in the past and still have a large number of outstanding accounts that need to be recovered. According to reports, ConocoPhillips alone has more than $10 billion in outstanding amounts. However, it needs to be clear that with the exception of Chevron, these oil majors are unlikely to actively participate until political stability is achieved, the actual managers of the country are clarified, and a solid legal framework that cannot be changed at will is established.

If bottlenecks in infrastructure such as pipelines, power, upgrades and ports can be resolved, a return to production of 3.5 million barrels per day can be achieved. However, it should be noted that large numbers can sometimes be misleading. Assuming that it takes $60 billion to get pipelines, power and export infrastructure back to normal, this may sound huge, but remember that in 2010 alone, the U.S. shale oil industry\'s total investment in drilling exceeded this number.

Capital exists, so does capabilities, and the key to determining speed lies in the legal framework.

Without a stable legal environment, little would change.

If the rules after Trump were revised, or if Venezuela simply transformed from one corrupt chaos to another, production would remain between 1.5 million and 3 million barrels a day at most. This is the worst situation. However, if the rule of law can be truly implemented, then reaching 10 million barrels per day in the next decade is not a fantasy. This is just a natural result of world-class resources being developed by world-class industries.

The key point is that even if we don\'t need to meet the best expectations, just allowing Venezuela to become a stable producer of 5 million barrels a day (similar to today\'s Canada) and maintain this level for decades to come, it can at least offset the loss of production caused by the mature decline of U.S. shale fields in the future. In a market where marginal barrels determine prices, this would have a huge impact.

In fact, you don\'t even have to wait until Venezuela\'s oil production reaches 5 million barrels a day. Simply increasing from the current 900,000 barrels per day to 1.5 million barrels per day next year is enough to impact Brent crude oil prices, as the market is already in an \"excess state\" of supply for 2026 and 2027.

Yes, pricing of physical goods is based on current demand rather than future expectations. But in the oil market, the number of \"virtual barrels\" traded on paper far exceeds the physical quantity in the actual market, and market expectations often drive price fluctuations before physical oil arrives.

Recall that in the fourth quarter of 2018, Trump lowered Brent oil prices from $90 to $55 a barrel based solely on sanctions exemptions on Iran and changes in tone, with almost no substantial supply changes.

In any case, long-term low oil prices are a blessing for all mankind.

I would like to further explain my views and respond in advance to critics who may question my predictions. After all, consulting firms like Energy Aspects are always trying to make things sound more complicated.

First of all, without saying humbly, I have invested directly or indirectly in the oil industry for twenty years. I have been to more remote oil fields than many industry \"keyboard experts\". I have experienced successes and failures with my own funds, not other people\'s money.

I spent hundreds of hours analyzing this market from scratch, from individual wells to countries to every barrel of oil around the world. I have used almost every serious data tool, from Kpler to OilX, Kayrros, JODI, and services from major agencies. For a while, I really felt like I could track the flow of every barrel of oil in real time. So please believe me, when I simplify the analysis process here, I have a basis.

Secondly, of course, I cannot accurately predict future production, since this is not a physics problem after all. It is path dependent, that is, it depends entirely on what happens next. If Trump does not implement his plan, if property rights issues are not resolved, if Venezuela simply shifts from one corrupt chaos to another after Maduro steps down, then nothing will change, or it will be just a marginal change.

But if Trump is half right, believe me, Venezuela\'s prospects will exceed expectations. These wells will become \"behemoths\" and the industry will be able to develop these resources at record rates, provided that political interference is ruled out.

However, these key conditions must first be established. The starting point for promoting oil production growth lies in property rights protection, the rule of law and a free market economy. Without these foundations, even with abundant oil reserves, it would be difficult to achieve significant growth. Perhaps by the end of 2027, production will reach 1.5 million barrels per day? Who knows.

The third point, which most people ignore, is that Venezuela does not start from scratch. It is called \"brownfield\" in the industry, meaning that its oil fields already have a certain development base. Currently, Chevron already produces about 300,000 barrels of oil a day in Venezuela. They were licensed during the Biden administration, and Chevron\'s history in Venezuela goes back nearly 100 years.

This means that Chevron has decades of geological data, production history and operational experience. ConocoPhillips and Exxon left in 2007, when then-President Hugo Chávez forcibly renegotiated contracts with all major oil companies, including European companies.

It can be seen that these oil giants already know the location of the oil fields, what technologies are effective, which equipment is easily damaged, and how to expand production. The data they have may have is more detailed than the National Petroleum Company of Venezuela (PDVSA). This provides a huge first-mover advantage for any revitalization plan.

Because of this, the situation in Venezuela will not be like the situation after the collapse of the Soviet Union. At that time, Western companies were prevented from entering for political reasons and had to learn everything from scratch. The oil industry is not just about pipelines and pumps. It involves logistics, engineering, process management and massive amounts of data. Once this knowledge is mastered and the rules of the game are clarified, capital and capabilities will naturally follow.

Of course, there are still many uncertainties. But even a moderate outcome, such as 4 million to 5 million barrels per day, would structurally change the global balance of supply and demand for liquid energy. Trust me, this will be a brutal shock, because Venezuela will produce one of the cheapest oils in the world. This change will have far-reaching implications. We can only hope that all this can happen.

For those who are skeptical of the significant increase in Venezuela\'s oil production, I want to provide another perspective. The United States has accomplished an equally seemingly absurd feat. U.S. shale oil production increased from 1.8 million barrels per day in 2010 to 9.8 million barrels by the end of 2025. In other words, American entrepreneurship has forcibly extracted oil production from the rocks equivalent to the size of \"Saudi Arabia.\" If you add in production from Alaska and the Gulf of Mexico, the current total oil production in the United States is about 13.8 million barrels per day, a whole new level higher than what most people thought was possible 15 years ago.

Chart: U.S. shale oil production (millions of barrels per day)

Source: Bloomberg

So, the question comes: Why is shale oil extraction so complex? Compared with traditional onshore oil fields, the extraction of shale oil can be described as extremely difficult. Oil in traditional oil fields is usually stored in \"natural tanks\" made of limestone or sandstone, and oil and gas flow naturally. Shale oil, on the other hand, is trapped in dense source rocks with extremely low porosity and permeability, which means it is almost impossible for oil to flow on its own.

In shale fields, you can\'t simply \"drill a well\" and let it produce oil naturally. Instead, you need to \"storm\" the rock through horizontal drilling, multi-stage fracturing technology, and huge investments of equipment, personnel, water, sand, steel and capital, just to release a small amount of oil.

Moreover, the output of each shale well can only be calculated in hundreds of thousands of barrels, unlike traditional oil fields that can provide millions or even tens of millions of barrels of production and last for many years. In contrast, shale oil wells typically last for only a few months before another well needs to be drilled.

This phenomenon is known in the industry as the \"Drilling Frenzy\".

Chart: Key factors in oil recovery and the potential of the Orinoco oil belt in Venezuela

Data source: Burggraben Analysis

The shale revolution is one of the greatest industrial achievements of our time. This is not just a geological story, it is the result of incentives, property rights protection, technology, logistics and capital markets working together.

Now compare this achievement with Venezuela, especially the Orinoco Belt. No matter what you think of heavy oil, yes, it does face challenges in upgrading and processing, but from a purely \"can we extract oil molecules from the ground\" perspective, Orinoco\'s heavy oil is much easier to mine than shale.

Quickly browse the chart above and you will get an intuitive comparison of the numbers. The permeability of shale layers typically ranges from 0.001 to 0.1 millidarcy, while the permeability of heavy oil reservoirs in the Orinoco oil belt in Venezuela typically ranges from 1,000 to 13,000 millidarcy. This is not a simple rounding error, but a difference of several orders of magnitude.

The same applies to porosity. The world\'s best quality Permian shale typically has a porosity of 4% to 8%, while the Orinoco heavy oil sand has a porosity of between 20% and 38%. So, ask yourself a simple question: If politics were excluded, what resource would you prefer to drill and exploit? Which resource do you think has lower full-cycle break-even costs?

Figure: Heavy oil resource potential in the Orinoco Oil Belt

Data source: US Geological Survey, 2009

Yes, the rapid development of shale oil in the United States is due to three powerful downwind factors.

The first is property rights protection. In places such as Texas, landowners often own the mineral resources under their land, which provides a direct incentive for them to develop these resources.

Next is oil services ecosystems. Texas has a large and fragmented oil services industry that is able to mobilize quickly and gain an edge in competition.

The third is financing capabilities. The United States has the deepest debt and equity markets in the world, and shale oil has received massive financial support even when it appears unrealistic to the outside world. Combining these factors has created the rapid rise of the shale oil industry.

But the key is: Even with these downwind factors, shale oil remains a technological nightmare compared to the traditional onshore resources of the Orinoco Belt. If U.S. capitalism can create a \"Saudi Arabia\" out of tight rock in 15 years, then once Venezuela establishes an effective property rights system and basic rule of law, the global oil and gas industry will flock to see the Orinoco oil belt as what it should be-the world\'s last huge frontier of oil wealth. Because it is.

Will Trump accept the political risks of nation-building under these circumstances?

The answer is yes. This was actually his clearly stated goal, and he expressed it in the most blunt way a president could do. You can hear for yourself what he has to say.

The Trump administration will not leave easily. They want to recover oil assets, rebuild the oil industry, and hope to make up for assets that have been expropriated and lost in the past. This is their strategy, clear and clear.

What is my opinion? Very pessimistic about oil prices. Trump\'s statement is of great significance. From the perspective of my oil industry, this is a game for rule changers. Of course, this won\'t happen overnight, but it will change gradually and advance every day. You have been warned.

Moreover, I don\'t think this administration faces the risks typically described by critics. This is not about fighting hostile insurgents in Afghanistan, nor is it an attempt to transplant Western systems into Islamic political orders like Iran or Afghanistan, where there is inherent hostility to Western values itself.

And this is Venezuela. It is culturally Western, the vast majority of people believe in Christianity, and it was a beacon of success before the socialists led by Hugo Chávez and Nicolás Maduro systematically destroyed it. This country can be repaired.

Now let\'s zoom in. This is not just a story about Venezuela, it is a story about global oil prices and therefore a geopolitical story. Venezuela has the potential to structurally bring long-term low oil prices, or at least maintain current low oil prices (assuming other conditions remain equal). If this happens, it will cut off the \"financial oxygen\" that funded the war in Ukraine, weaken the Kremlin\'s grip, and significantly weaken the geopolitical influence of certain major powers.

And before this happens, another chain reaction may have begun, such as the possibility that hard-line regimes in some countries may collapse because they also have large untapped oil reserves and are only waiting for the \"invisible hand\" of the rule of law to release these resources.

All of this will break the financial chain of terrorism financiers, whether in Qatar or elsewhere. And all this, ladies and gentlemen, is a boon for peace and mankind.

You won\'t hear these views from the so-called progressive left\'s \"do-good\" Marxist admirers in the next few weeks. But the truth is that low oil prices are one of the biggest drivers of peace and prosperity. However, few people truly realize this.

Instead, the left will raise all kinds of objections, no matter how ridiculous, until they ultimately inevitably side with murderers and dictators. Unfortunately, these are the rules of today\'s traditional media games, and they are completely partisan.

Picture: Trump\'s press conference on Venezuela, January 3, 2026

On January 3, 2026, President Trump held a press conference on Venezuela. Of course, the situation in Venezuela is far from over, and the final result has not yet been settled. But if good luck, continued courage and right decision-making continue to accompany Trump, he may indeed deserve the Nobel Prize. From my perspective, he is currently moving in the right direction.

Therefore, the credit goes to where the credit goes. We should praise or criticize each action based on its actual performance, not based on partisan positions. President Trump and his team did a great job.