ASTANA – Oil prices fluctuated in overnight trading after United States President Donald Trump took action against Venezuela by capturing Venezuelan President Nicolas Maduro on Jan. 3, and adding uncertainty over future global supply and the impact on oil-exporting countries such as Kazakhstan.
Venezuelan crude is heavy and high in sulfur, comparable to some Russian export grades such as Urals and to certain Middle Eastern blends.Photo credit: investorplace.com
The developments come amid criticism from governments and analysts who have questioned the legal basis of the U.S. intervention, which also causes economic uncertainty that could influence markets over time.
Aruzhan Meirkhanova. Photo credit: personal archive
“Short-term, Venezuelan developments are unlikely to trigger substantial global supply increases given structural constraints. The widely cited figure of 303 billion barrels of reserves does not reflect production realities: Venezuela currently accounts for less than 1% of global oil supply, and its extra-heavy crude is costly and complex to extract,” Aruzhan Meirkhanova, a senior analyst at Outpost Eurasia, an independent public affairs and policy consultancy that works across Central Eurasia, told The Astana Times.
While Trump said American companies would “go in, spend billions of dollars, fix the badly broken infrastructure,” that enthusiasm did align with the companies’ own intentions.
During Trump’s meeting with industry executives on Jan. 9, ExxonMobil Chairman and CEO Darren Woods describe Venezuala “uninvestable.” Woods said the company has been working in different regimes, yet they do not go “into any opportunity with a short-term mindset.
Meirkhanova echoed these remarks.
“Rystad Energy estimates that a meaningful recovery would require sustained investments of $8-9 billion annually through 2040. Moreover, major U.S. oil companies such as ExxonMobil have publicly signaled that Venezuela remains effectively ‘uninvestable’ without robust legal and contractual guarantees. Near-term impacts on crude prices stemming from Venezuela should not be overstated,” she said.
“Conversely, unrest in Iran may have a more immediate effect on markets. Further escalation could bump crude prices in the short term, offering temporary relief to oil exporters,” she added.
Unprecedented case
Kuanysh Beisengazin of the National Bureau of Economic Research described the episode as unprecedented in scale, with broader implications for the global economy and investors, even though Venezuela currently accounts for only approximately 1% of global oil production.
Kuanysh Beisengazin. Photo credit: economykz.org
Beisengazin explained that the use of direct U.S. military force in Latin America for the first time in decades increased geopolitical uncertainty and prompted investors to reassess risk premiums.
“It reminds investors that geopolitical events can shake markets more sharply than tariffs or economic data. In the immediate aftermath, gold prices rose as demand for safe-haven assets increased, while the U.S. dollar strengthened as capital moved into perceived safe havens,” he wrote in an opinion piece published on the Economy KZ website.
In the long term, the expert said Venezuela’s vast reserves could alter market dynamics if U.S. sanctions were eventually lifted and Western companies returned.
Beisengazin also stated that it increased legal and institutional uncertainty for global markets. He noted that the detention of a sitting head of state has raised questions about the principle of sovereign immunity, a cornerstone of international law that protects leaders from foreign jurisdiction.
According to him, the timing of the operation also reflected cyclical conditions in global oil and financial markets. He noted that the oil market entered 2026 relatively well supplied, with rising U.S. production and slower demand growth keeping prices under pressure.
“This situation created a ‘window of opportunity,’ the oil strike in Venezuela did not threaten fuel shortages in the U.S. Moreover, the decline in U.S. inflation, driven by lower energy prices, mitigated the domestic political risks of a sharp increase in gasoline prices. This is an important point: when Washington decided on military action, it took into account that it would not provoke an oil shock for American voters,” Beisengazin explained.
“Second, Venezuela’s fiscal and budgetary constraints reached their peak. By 2025, the regime had virtually exhausted its gold and foreign exchange reserves, and hyperinflation was only brought under control through the dollarization of the economy and external assistance,” he added.
Implications for Kazakhstan
Despite recent volatility, Meirkhanova suggests that the global oil market still indicates lower prices unless there is a major supply disruption.
“Goldman Sachs has warned of a ‘wave of excess supply,’ placing average Brent prices at $56 per barrel in 2026, with a potential dip to $54 in the fourth quarter,” she explained.
This is where it might become risky for Kazakhstan, a major oil producer and member of OPEC+.
“While oil production and export volumes increased last year, largely driven by the Tengiz expansion, revenue returns have been diminishing due to lower average prices. The 2026 budget assumes a $60 per barrel baseline, yet even this is below the fiscal breakeven price. It is fair to say that the era of ‘easy oil money’ has come to an end. Kazakhstan will need to accelerate diversification efforts and prepare for a more constrained fiscal environment,” she explained.
Beisengazin also reiterated that developments in Venezuela have not yet led to deviations in oil prices beyond the range envisioned in the Kazakh budget base-level scenario.
“In the short term, this suggests no immediate impact on Kazakhstan’s budget revenues and its National Fund, provided prices remain within roughly $55 to $65 a barrel. However, risks remain on both sides,” he explained.
A sharper escalation that pushes oil prices toward $70–$80 per barrel could provide a temporary fiscal boost for Kazakhstan, whereas a de-escalation scenario, including a gradual return of Venezuelan supply over the next one to two years, could add downward pressure on prices.
“Prices closer to $50 a barrel would pose challenges for Kazakhstan,” he added.
A new phase in geoeconomics
Beisengazin warned of the emergence of a new phase of geoeconomics, explicitly reflected by the developments in Venezuela, in which sanctions, military action and markets are increasingly intertwined.
“For economists and investors, the focus is less on the emotional impact of the episode than on a clear assessment of its consequences,” he writes.
While markets appear to have avoided extreme turbulence, with oil prices and stock indexes remaining within familiar ranges in the near term, the expert believes structural shifts are likely over the longer term.
Implications for global energy transition
The prospect of a rapid return of Venezuelan oil to global markets has raised broader questions beyond pricing, including how additional fossil fuel supply could affect the pace of the global energy transition.
The impact, Meirkhanova suggests, is minimal because global energy transition is no longer driven only by climate concerns but by competition and economic resilience. As a result, low-carbon energy systems are increasingly embedded in national strategies and are unlikely to be reversed by short-term shifts in oil supply.
“While additional barrels can influence prices at the margin, the transition now exhibits strong path dependency. The economic, strategic, and industrial logic underpinning decarbonization has become sufficiently entrenched to withstand isolated supply shocks,” she said.
“In the EU and China, policies to expand renewables, electrification, and domestic manufacturing are closely tied to reducing exposure to geopolitical risk and import dependence. India, another major energy consumer, announced that it has already achieved 50% of its installed electricity capacity from non-fossil fuel sources, underscoring the pace of this structural shift,” Meirkhanova explained.
