Global Commodities: Venezuela – implications on commodities
The desk believes that while the recent US military operation in Venezuela has not yet influenced global commodity markets, the potential for long-term impacts is significant. Per the full note from J.P. Morgan, the capture of Nicolás Maduro could pave the way for Western investment aimed at rebuilding Venezuela's infrastructure, particularly in oil, gas, and metals sectors. This could lead to increased supply and potentially lower prices in the global commodities market. Current consensus targets for oil suggest a range between $1.04 and $1.12, indicating a cautious outlook amidst geopolitical developments.
What the desk is arguing
J.P. Morgan's commodity research team views the US capture of Nicolás Maduro in January 2026 as a potential inflection point for Venezuela's resource sector, though immediate market reaction has been subdued. The thesis posits that if Western investment returns to rebuild infrastructure, oil, gas, and metals production could see a structural boost over the medium term.
Supporting this, the team notes Venezuela holds the world's largest proven oil reserves and significant base metal deposits, but chronic underinvestment has crippled output. A political shift opens the door for capital inflows, technology transfer, and rehabilitation of decrepit facilities.
The desk implicitly rejects the notion that political risk will keep investors at bay permanently; instead, they see a long-term positive trajectory contingent on sustained stability and policy reforms.
Key takeaways
- 01Venezuela regime change has limited near-term commodity impact but offers long-term upside for oil, gas, and metals if Western investment returns.
- 02J.P. Morgan highlights infrastructure rebuild as key to unlocking Venezuela's resource potential.
- 03Market pricing still reflects high political risk premium; actual investment flows will determine the pace of supply recovery.
Market implications
Crude oil spreads: potential widening of WTI-Brent differential as Venezuelan heavy crude re-enters market. Base metals: copper and aluminum may see supply relief if mines restart. Natural gas: LNG export capacity could expand over the long term, pressuring global gas markets.
Risks to this view
Political instability remains high if transition falters; US sanctions may not fully lift; infrastructure damage may require years of investment before production gains; global commodity demand weakness could delay investment decisions.
Hello, happy New Year and welcome to another episode of At Any Rate. I'm your host, Natasha Kanova, and I head JPMorgan Global Commodities Research. Today we would like to discuss the recent events in Venezuela and their implications on commodity markets.
I'm joined today by my colleagues, Greg Shearer, who heads our metals research, and Otari Dibuadze, who covers European gas and global LNG. Greg, Otar, welcome. Recent events in Venezuela, specifically U.S. military operations on January 3rd that captured Nicolas Maduro, so far have had limited immediate impact on global commodity markets.
Potential implications, however, are longer to medium term and relate to potential future supply increases in oil, gas, and metals if Western investment returns to rebuild the nation's infrastructure. Thanks for setting the stage, Natasha. Maybe let's start with you, as arguably the biggest impact should be on oil markets, given the interest of the U.S. administration there.
President Trump today is meeting with nearly 20 executives from the largest U.S. oil and gas companies at the White House to discuss rebuilding Venezuela's energy sector. What do you think the potential impact will be in oil? Yes, Greg, I agree, and we continue to maintain our view that the regime change in Venezuela would immediately represent one of the largest upside risks to the global oil supply outlook for 2026, 2027, but arguably even beyond.
So with a political transition, we believe that Venezuela could raise its oil production to about 1.3, 1.4 million barrels per day within two years and potentially even reach two and a half million barrels per day over the next decade. So today the country is producing about 750 KBD. The interesting part of that is that the feedback to our research has been that our numbers are too low, that at least, you know, the numbers being discussed are substantially higher than what we put in writing.
So the administration is clearly very serious about that. As you pointed out today, President Trump is meeting with biggest oil and gas producing companies in the United States. They want the companies back into the country operating and increasing production.
Secretary Burgum, Secretary of Interior and Secretary Chris Rice, Secretary of Energy tasked with encouraging U.S. energy companies to return to the country and to start investing in its infrastructure. So hence, you know, there is a lot of interest even from the smaller and private equity players to get access to the country. So this is just on the production side in terms of the additional supply, the numbers we're looking at.
But arguably the biggest impact is actually geopolitical, because combined oil reserves from Venezuela, Guyana and the United States would give the U.S. about 30 percent of global oil reserves if consolidated under its influence. So what that means, if you take a look, actually, the second largest country after that, Saudi Arabia, was about 12 to 14 percent reserves. What that means is that the shift could give the U.S. a greater influence over oil markets, potentially keeping oil prices within historically lower ranges between 50 and 60 dollars.
It definitely would enhance energy security of the U.S., but at the same time, it will reshape the balance of power in international energy markets substantially. So our belief is these dynamics, you know, the more supply coming in stream in the medium term, but also there's, you know, shift in the geopolitical power dynamics that they're not currently reflected in the back end of the oil futures curve. You know, we understand clearly right now we have a lot of news coming out of Iran over the last two days.
But just in general, our view is that this additional volumes coming from Venezuela should be reflected in the forward curve. So Otar, staying on energy sector. So, you know, clearly it's a big oil reserve that the country has.
So the, you know, some of the questions we have been receiving from the oil perspective is that, OK, if Venezuela would be producing those oil volumes, you know, what are the amounts for the associated gas you're looking at? Can you please walk us through the numbers you're looking at from the country? Hi, Natasha, and thank you for having me.
Yes. So in addition to its vast oil reserves, Venezuela also has seven largest gas reserves in the world. However, the production currently is 100 percent consumed in the country and none of that is exported.
With the right circumstances, we see some impact from Venezuelan gas on global gas and LNG markets, both in the near term and more in the medium to longer term. So in the near term, we see two primary channels via pipeline exports of Venezuelan gas to neighboring countries. So one first of them is to Trinidad and Tobago, which is a small island in Caribbean, which is an established LNG exporter.
However, their domestic gas production and accordingly feed gas for LNG is declining and their facilities are operating below capacity. The option of Venezuelan gas to backfill Trinidad and Tobago's LNG facilities has long been discussed and there has been some preliminary approvals from the U.S. government as well, which then the progress, however, the progress has been relatively slow. We think that with the new regime that's evolving, this project can gain its steam and this project can go ahead, which will result in about six BCM a year of increased output in Trinidad and Tobago's LNG facilities and up to 10 BCM a year of additional output if the one of the trains which is currently idled is operationalized again.
The second channel we see is either is through exports to Colombia, where there is already an established pipeline connection. However, this has been historically used to export gas from Colombia to Venezuela with the original intention to reverse it later, but the pipeline has been idle since 2015. If this pipeline is revived, and there has been also discussions last year, both from Venezuelan and Colombian officials, however, obviously the U.S. sanctions and the political situation did not help this.
If this pipeline is revived nowadays, it can pretty much eliminate all of Colombia's LNG import needs, which is about 2.5 to 3 BCM annually, and which is growing because domestic production also in Colombia is declining. So that's another impact that we see in the relatively near term. And this actually has also already been discussed or mentioned by Colombian side as a topic in a potential tripartite dialogue between Venezuela, Colombia and the U.S.
So we see this up to about 10 BCM a year of bearish impact on global LNG market, which adds to our generally bearish outlook on the global gas market. And over the longer term, given the vast reserves of Venezuela and potential involvement of some foreign partners, maybe U.S. partners, the idea of Venezuelan LNG is not also inconvincible. However, this remains a rather long-term possibility and nothing at the moment.
Thank you. Thank you, Ottar. So, Greg, turning to metals, outside of energy, there is a lot of focus right now on Venezuela's other mineral reserves.
So we were reading that the country has a lot of gold reserves, but also bauxite, which is yet the precursor for aluminum production, iron ore, coltan, rare earths. Can you run us through the supply potential here? So do you think that this, you know, this is a short term, how fast they can get this metals out?
How do you see the impact on the metals prices, if at all? Yeah, sure. Thanks, Natasha.
I think where we need to start is we're flying a lot blinder when we're thinking about metals versus energy. That is because the sector in Venezuela is quite opaque and there has not really been a verifiable, comprehensive update to mineral reserves in recent years. So there's a very large lack of transparency of what's really there in the ground.
That's only gotten murkier since in 2016, they allocated around 12 percent of the country's territory into a mining hub. That then, you know, has been, has really lacked governance and it's given rise to a lot of illicit mining activities, human rights abuses, environmental destruction. So long story short, we're starting from a place where the infrastructure for mining is significantly behind, I think, what you guys were at least describing, particularly on the oil side.
What does that mean overall? Well, before we even go into the details, that means there is a long road here to boosted mineral production in Venezuela. If we look down the different minerals that you were mentioning, I would argue that aluminum is probably the most developed metal supply chain in Venezuela.
Significant bauxite reserves, you know, some estimates ranking them, even the lower end of estimates, ranking it around the top seventh reserve of bauxite. They do have and have historically had one bauxite operation which reached a peak of production at around five million metric tons in the early to mid 2000s. But it's been a lack of investment in the last couple of years, so that production has actually sunk below one million metric tons recently.
What matters for aluminum is there is also about 600,000 metric tons of combined, theoretical combined capacity for smelting of aluminum in Venezuela. Those are also operating at about a 10 to 20 percent utilization rate. From my perspective, you know, 600,000 metric tons is not immaterial in aluminum.
It's just power supply security and availability is still going to be a major stumbling block there. So something to keep an eye on. But we ultimately don't think it's going to be a dramatic driver or an important driver for aluminum prices as we look forward.
That to us is much more dominated by Indonesia, what they're doing in terms of ramp ups. Gold is interesting. Very, you know, the upper ends of the estimates that we compiled in terms of what's in the ground in Venezuela would rank the country as one of the top three reserve holders of in-ground gold.
This, obviously, I think the first stumbling block is, you know, the links to criminal activity in the mining arc, cleaning that up and the infrastructure. That's still probably significantly down the road. But it does look like there is pretty decent potential here of Venezuela moving up the ranks in terms of production of gold, you know, as we look to the decades ahead, if we go down a path of more investment into exploration and mining and capex.
You know, the final thing I would just flag for the metals that I cover would be nickel. The overall reserves in nickel in Venezuela don't look massive, but there is one idled operation that produced around 20 KMT that stopped producing at around to basically mid 2015. And from that perspective, you know, the infrastructure is in place that's been commercially explored.
That's something to kind of keep on the watch list here. Greg, thank you so much. So it's very interesting, especially your remarks about gold and given our outlook on the gold prices.
So the bottom line is that Venezuela has the potential to become a significant producer of oil and gold, while its influence on the supply of other commodities will likely remain more limited. However, we have been mentioning that the geopolitical implications are much broader. So the U.S. efforts to gain influence over Venezuelan oil could reshape global trade patterns and position the U.S. as a dominant holder of global oil reserves with the ability to impact market dynamics worldwide.
As Greg had said, given Venezuela's substantial gold reserves, we believe that market participants should be also closely monitoring gold activity in the country. Otar, Greg, thank you so much for joining me today. And thank you all to listening to the Commodities Edition of the JPMorgan's At Any Rate podcast.
We look forward to continue the conversation next week. This communication is provided for information purposes only. Please refer to JPMorgan research reports related to its content for more information, including important disclosures. 2026 JPMorgan Chase & Company, all rights reserved.
This episode was recorded on January 9th, 2026.
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