Brief Summary
This video explains why the United States, despite being the world's largest oil producer, still seeks to acquire more oil, particularly from Venezuela. It explores the different types of crude oil, the mismatch between the oil the US produces and what its refineries can process, and the historical and political factors influencing the US-Venezuela relationship. The video also touches on the roles of Russia, Iran, and China in Venezuela's oil industry and the future prospects for Venezuelan oil production.
- The US produces a lot of light crude oil but needs heavy crude for its refineries.
- Political tensions and sanctions have complicated the US relationship with Venezuela, a major holder of heavy crude reserves.
- Countries like Russia, Iran, and China have stepped in to fill the void left by the US in Venezuela's oil industry.
The US is the world’s biggest oil producer – why does it want more?
The United States is the world's largest oil producer, a fact often highlighted by political figures. Despite this, the US expresses interest in acquiring more oil, even from countries like Venezuela. This raises the question of why the US seeks additional oil resources when it already produces a significant amount domestically. The answer lies in understanding the complexities of oil and its role in shaping global politics and economics.
Not all oil is the same
Oil is a versatile resource used for transportation, energy, plastics, and various other products. Different applications require different types of oil, similar to how different types of chocolate (dark, milk, white) have distinct characteristics. Crude oil varies in density, sulfur content, and flow, leading to classifications ranging from light sweet crude to heavy sour crude. Refineries are designed to process specific grades of crude oil, with light crude being easier to refine into gasoline and jet fuel, while heavy oil is used for ship fuel, road materials, and other products. Light sweet crude is generally more valuable than heavy crude due to its ease of refining.
The key to understanding the US oil industry
The United States both exports and imports significant amounts of oil. In 2025, the US sold 13.4 million barrels a day while importing nearly two million barrels daily. This is because the US produces mostly light crude oil (80%), while its refineries are primarily designed to process heavy crude oil. These refineries, particularly those along the Gulf Coast, were built to handle heavy sour crude oil imported from Latin America and Canada during the 20th century.
America’s shale oil boom and the economics of oil
Technological advancements in the early 2000s enabled the extraction of light crude oil from shale rocks on a large scale, leading to a mismatch between the type of oil produced in America and the type its refineries can process. Modifying refineries to process light crude is expensive, making it more economically viable for the US to sell its light crude at a higher price and buy heavy crude at a lower price. Many countries with the largest oil reserves, such as Venezuela, Iran, and Russia, are known to extract heavy crude.
The relationship between the US and Venezuela
Despite sanctions, small amounts of oil from Venezuela have historically entered the US due to the long-standing relationship between the two countries. American companies played a key role in establishing Venezuela's oil industry after the discovery of oil there. This positive relationship continued for much of the 20th century, even after Venezuela nationalized its oil industry in 1976.
The turning point: Hugo Chavez and Nicolás Maduro
The relationship between the US and Venezuela began to shift when Hugo Chavez came to power in 1999. Chavez asserted state control over the oil industry, imposing stricter conditions on foreign oil companies, which displeased the US government and oil companies. Nicolas Maduro continued these policies after Chavez's death in 2013.
Why Trump says Venezuela has stolen their oil
In 2019, a World Bank tribunal ordered Venezuela to compensate US oil companies, but the compensation was not paid. This is part of what led President Donald Trump to claim that Venezuela had stolen American oil rights after they were ousted from the country. Venezuela denies these claims.
Nicolas Maduro and his wife are seized and taken to the US
Tensions between the two countries escalated, leading to the US military seizing oil tankers and blockading Venezuelan ports, allegedly to combat narco-terrorism. A fictional scenario is presented where American troops seize Nicolas Maduro and his wife and take them to the United States to face drug-related charges. The fictional president then states his intention to allow the greatest oil companies in the world to invest billions of dollars in Venezuela, with the Venezuelan people being the biggest beneficiary.
What role do Russia, Iran and China play?
US and Western sanctions on Venezuela have created opportunities for countries like Russia, Iran, and China to increase their influence. China has become a significant trade partner with Venezuela and most South American countries, purchasing raw materials like oil, copper, and soya. China buys around 90% of Venezuela's oil, making it a key trading partner. The Trump administration aimed to counter this influence to ensure regional safety and prevent the presence of perceived enemies.
What happens to Venezuela’s oil now?
Despite having the world's largest known oil reserves (around 303 billion barrels), Venezuela exports fewer than a million barrels a day due to sanctions, underfunding, and mismanagement. The country's infrastructure needs significant rebuilding. It may take three to four years before Venezuelan crude oil is available in meaningful volumes. While there is a growing push for renewable energy, oil remains crucial to the global order and a massive source of wealth, transforming the fortunes of nations.
