US President Donald Trump says that the Monroe Doctrine, the 1823 policy establishing the Americas as a sphere of influence solely for the US, is history. He has recently recoined it as the “Don-roe Document” after the dramatic grab of Venezuela’s president, Nicolás Maduro by US special forces. He stated that the country hosted “foreign adversaries” which were a threat to the US. The move could dramatically change the country's oil situation, not so much for world energy markets, but a major shift in the rules on global resources.
The ease of Mr Maduro’s abduction suggests that elements of the Venezuelan regime or military co-operated with the US. Within the system, three factions vie for power: vice-president Delcy Rodríguez and her brother Jorge, president of the National Assembly; Diosdado Cabello, who runs the intelligence and police forces; and defence chief Vladimir Padrino López. Against these are opposition leader María Corina Machado and the real winner of 2024’s fraudulent elections, Edmundo González, who went into exile in Spain.
The White House’s intentions for the country remain as clear as Venezuela’s sludgy crude oil. After snatching one caudillo, Mr Trump said, “We're going to run the country until a safe, proper and judicious transition”, that Ms Machado “doesn’t have the respect”, and that now interim president Ms Rodríguez was “willing to do what we think is necessary”.
Equally murky are the US’s plans for Venezuela’s oil. US Vice-President JD Vance said, “the stolen oil must be returned to the United States.” It is not clear what he has in mind – possibly decades-old nationalisations of US petroleum assets, though British-Dutch, Spanish and other companies suffered similarly.
Mr Trump commented that, “We are going to be taking a tremendous amount of wealth out of the ground.” Venezuela’s mineral wealth is mostly in its oil, but it also hosts gold, cobalt and – a Trump administration fixation – possible rare earth resources. Ms Machado had promised to privatise the nation’s petroleum industry.
Venezuela claims the world’s biggest reserves, an oft-quoted 303 billion barrels. But these are largely theoretical and its output declined drastically after decades of underinvestment, nationalisation, looting and sanctions under Mr Maduro and before him Hugo Chavez, president from 1999 to 2013.
Exports of about 900,000 barrels a day dropped sharply last month as the US imposed a blockade. The maximum impact of the US intervention is therefore a loss of less than 1 per cent of world supply, which could easily be covered by an increase in output from other Opec nations.
The crude is mostly heavy and sour (high-sulphur). It has historically headed for specialised refineries on the US Gulf of Mexico coast, but more recently, much has been soaked up by China. The most direct replacements would be Saudi Arabia’s Arab Heavy or Iraq’s Basrah Heavy, which are still rather lighter, or Kuwait Heavy, which is only exported in small quantities so far. Still, refiners can work around this.
Conversely, it’s more likely that the removal of Mr Maduro will lead to an increase in Venezuela’s output. Ms Rodríguez or another leader acceptable to the US would result in the blockade and sanctions being suspended. US major Chevron, the largest foreign producer in Venezuela, would be able to return in full to its operations. ExxonMobil and ConocoPhillips saw their projects nationalised around 2007, were awarded large sums in arbitration hearings, and might come back to recoup these losses.
Conversely, China National Petroleum Corporation, which produces about 110,000 bpd in the country, and a number of small Chinese companies, might find their assets under threat. Washington will not want a repeat of the Iraq experience, where US troops opened the door mostly for Beijing’s oil corporations.
Within three years or so, under a stable government open to foreign investment, Venezuelan output could plausibly recover to two million bpd, and perhaps two-and-a-half million bpd beyond that. Over the past few months, international oil companies are once again looking to access large resources, even in politically tricky areas such as Iraq, Libya and Syria.
This would not drastically change the oil market, but it would put pressure on Caracas’s Opec colleagues while they seek to regain market share over the next few years.
Venezuela’s sovereign debt is variously estimated at $150 billion to $170 billion, twice its GDP. Only a relatively small part, $20 billion, is owed to China, after writedowns and restructurings, and about $3 billion to Russia. Venezuela’s gold may have been converted to as much as $60 billion of cryptocurrency, suggest investigative journalists Bradley Hope and Clara Preve, but where that is now is anyone’s guess.
Hypothetical future production, at moderate oil prices, might yield some $20 billion of additional annual profits, not enough to rebuild the country, pay off creditors and yield big profits to US corporations.
Mr Chávez’s “Bolívarian Revolution” ended up wrecking the country. But it was in the first place a reaction against years of austerity, privatisation, foreign involvement and gross economic inequality. A new US-imposed regime would be likely to face a similar counter-reaction, if not immediately then after a few years. Venezuela has many skilled people in its nearly eight million diaspora, who might return. But it is awash with armed gangs and loyal “Chavista” supporters.
What does the new “Donroe Document” mean for the Western Hemisphere, and the world? Mr Trump has variously threatened Mexico and Canada, two of the US’s key oil suppliers, Panama, a key energy transit route, and Greenland, a largely theoretical future source of rare earths.
Other leftist Latin American presidents, albeit democratically elected, such as Gustavo Petro in Colombia or “Lula” da Silva in Brazil, lead significant producers of oil, gas and minerals. They have previously come under US criticism, and both condemned the Venezuela operation.
Further afield, the immediate success of this operation might embolden Mr Trump’s inner circle to act against Iran, hoping to take advantage of its current wave of anti-government protests. Two other global powers, China and Russia, have lost out in Venezuela, but see their territorial aspirations in their spheres of influence legitimised. The catch in Caracas is not the first and will not be the last of the new land and resource grabs.
