Amid a series of changes in the energy sector and a rising global price environment, estimates suggest that Venezuela could turn up the dial on its oil production. Considering a range of variables, the Institute of International Finance (IIF) estimates three possible scenarios for the future of this industry in the Latin American country, which would result in an increase of between 150,000 and 500,000 barrels per day.
“Recent policy changes and public policies have reset parts of Venezuela’s operating environment,” the institution said in a recent report. “Targeted easing of sanctions, stricter U.S. oversight, and changes in the domestic legal framework have opened the way for a limited recovery, while the scale of the resource base implies that sustained investment could bring significant gains over time,” they added.
Nevertheless, the Institute emphasized that production prospects remain constrained by persistent challenges at the operational, financial, and governance levels. This keeps short-term outlooks at a high level of uncertainty.
Against this backdrop, the IIF calculated how oil production in Venezuela could improve in the future, based on three projected scenarios, taking into account the state of current assets, cost structures, and realistic implementation timelines.
A modest scenario
In a scenario of modest improvements in crude production, the institution foresees a gradual recovery in output from early 2026 levels. This process, they note, would be supported by regained access to markets following some disruptions in exports.
“Short-term gains would be driven by Chevron’s joint venture operations, given PDVSA’s constrained operational capacity, with only limited contributions from other partners such as Repsol,” the IIF said in its report, signed by María Paola Figueroa, Martín Castellano, and Yifei Zhu.
Under this scenario, they estimate that production could rise from the one million barrels per day recorded by the industry last year by around 150,000 barrels per day over the next two years, assuming operational continuity.
“While access to diluents has improved thanks to licensed imports, easing a key constraint, production growth would still be limited by bottlenecks in ports and exports, weak refining capacity, aging infrastructure, depressed drilling after years of underinvestment, and an investment environment that remains uncertain and does not favor broader capital flows,” the IIF noted.
A moderate scenario
A more optimistic context is what the Institute currently considers its base case, and this outlook would bring a larger increase in oil production.
“Emerging signs of investor participation point to an improved environment that could lift production by between 300,000 and 350,000 barrels per day over the next two years, bringing it to the range of 1.3 to 1.4 million barrels per day,” they projected.
In this scenario, most of the gains are expected to come from heavy oil assets in the Orinoco Oil Belt, along with a selection of western fields requiring limited rehabilitation.
“The increase in production would be driven by well reactivations, targeted infrastructure repairs, and other short-cycle investments in current operations,” the institution forecast.
In this regard, they state that this case would reflect greater use of existing capacity and improved operating conditions for operators already in place. It would also maintain more modest capital requirements than a full reconstruction of the sector.
An optimistic scenario
“A more decisive improvement in policies and the investment environment could support a stronger production response over the next two years,” the IIF stated.
In this scenario, which provides more support for the sector’s recovery than the others, the institution estimates that production would increase by around half a million barrels per day, bringing it to 1.5 million barrels.
The expectation in this context is that gains would extend beyond a short-cycle recovery, and that well reactivations would include greater extraction activity and increased project development across the Orinoco Oil Belt and selected fields.
“Achieving this short-term expansion would require more stable fiscal and contractual terms, progress in resolving legacy debt arrangements, and a more durable framework for licenses and sanctions,” they noted.
In addition, they emphasized in their report that this scenario would also depend on a broader reconstruction of critical infrastructure — including transportation, networks, storage, and export terminals — along with the rehabilitation of the energy sector, given its central role in on-the-ground operations.
