Events in Venezuela’s Oil Market: Who Will Benefit and What Awaits Latvia?

The US operation in Venezuela became the first significant geopolitical shock of the year. As a result, the share prices of major US oil companies increased, and, as always in times of geopolitical uncertainty, some investors sought refuge by purchasing gold and cryptocurrencies. Overall, the oil market reacted unexpectedly calmly – fuel prices did not fall but even rose slightly, and the full impact is likely to unfold over the long term.

Global Oil Prices Are Rising

Venezuela has the world’s largest officially confirmed oil reserves – about 303 billion barrels – making it formally an important player in the global oil market. However, the financial market’s reaction reminds us that the scale of reserves alone cannot dictate global dynamics. Markets initially expected oil prices to fall, assuming that Venezuelan oil might become accessible to the US under a potential easing of sanctions. Yet reality was the opposite – on Monday evening, oil prices rose by almost 1 %.

Two key factors underpin this development. First, considering inflation, the global oil price is currently at its lowest level in almost 20 years – supply remains excessive, so there is little basis for further price declines; rather, price increases are expected.

Second, although Venezuela has huge oil reserves, the country’s oil infrastructure is outdated and requires significant investment, especially in heavy oil extraction. Even if US companies get involved, Venezuelan oil will only enter global markets after several years, once infrastructure is restored. Therefore, in the near term, the global oil market situation will not change significantly.

What Awaits Latvia?

Meanwhile, fuel prices in Latvia will remain relatively low in the short term, thanks to comparatively cheap oil on global markets. Oil prices have likely already reached their lowest point, so this year, with the risk of global price increases, the average fuel price in Latvia will likely be higher than last year, also considering the excise duty increase on fuel effective from 1 January.

The eurozone and Latvia will likely not feel any significant immediate impact. In our region, final fuel prices are mainly determined by global oil prices, which may remain relatively low if US oil refining companies in the Gulf of Mexico invest and gradually restore Venezuela’s oil infrastructure.

The Biggest Winner Will Be the US, Losers – China and Russia

It is no coincidence that heavy oil accounts for about 60% of all US oil imports. Heavy oil is used in the production of diesel and aviation fuel, so access to Venezuela’s large heavy oil reserves would allow the US not only to control domestic fuel prices more effectively but also to gain competitive advantages in certain fuel product export markets.

Meanwhile, the biggest losers will likely be China and Russia. Venezuela is an important supplier of heavy oil feedstock for Chinese oil refining companies, so the future of these flows will increasingly depend on Beijing’s relations with the US administration. Russia will also come under strain – in the long term, the US will intensify competition across energy export markets, particularly in diesel and aviation fuel segments.

Geopolitical Shocks Harm the Global Economy

It should be noted that such military operations or unexpected changes of power usually increase uncertainty in the global economy. Investors and businesses become more cautious, consumption decreases, and market volatility rises. Such military actions generally worsen consumer economic sentiment.

Uncertainty drives capital towards safer assets traditionally considered “safe havens” during crises, such as precious metals. Since Monday, gold prices have risen again. Similarly, interest in alternative assets such as cryptocurrencies is increasing, although their reaction, as usual, is more volatile. This confirms that uncertainty simultaneously creates both risks and opportunities for those seeking security or alternative returns.

About Citadele Group

Citadele is the only Baltic bank whose parent company is headquartered in Latvia, ensuring a proportionally greater contribution to the Latvian economy. Its subsidiaries and branches operate in Latvia, Lithuania, and Estonia. 

Citadele’s mission is to modernize the financial sector by offering a range of next-generation financial technology-based services alongside traditional banking products, serving both private individuals and entrepreneurs across the Baltics. In the first nine months of 2025, Citadele issued EUR 1.2 billion in new loans, with the total loan portfolio reaching EUR 3.67 billion and deposits growing to EUR 4.1 billion. 

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