Accelerating Investment Could Push Venezuela Oil Production to 2 Million BPD
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Venezuelan sovereign and state oil company bonds have surged to near four-month highs following the Trump administration’s move to take control of over 65 billion barrels of the nation’s proven oil reserves. Investors are anticipating a substantial boost in crude production ahead of a massive debt restructuring process that could exceed $200 billion. According to Bloomberg data, defaulted sovereign notes maturing in 2027 recently climbed to 54 cents on the dollar.
Though specific details of the agreement remain limited, the development is expected to accelerate production, making Venezuela’s target of 1.5 million barrels per day (bpd) increasingly viable. This outlook of rising oil revenues has bolstered investor confidence. Damien Buchet, chief investment officer at Principal Finisterre, noted that the arrangement increases the likelihood of U.S. dollar inflows, which will be critical for future debt servicing.
Because oil revenues generate the vast majority of Venezuela’s foreign currency, the upcoming debt restructuring is heavily dependent on the country’s output capacity. Morgan Stanley strategist Simon Waever indicated that the political signal of the U.S.-Venezuela deal is currently more significant than the specifics, reinforcing optimistic production forecasts.
Furthermore, Jefferies Financial Group projects that Venezuelan oil production could reach 2 million bpd within five years, provided the agreement remains intact and the $100 billion in oil investment proposed by President Donald Trump is realized.
Private sector commitments are already taking shape. Chevron recently announced plans to invest over $7 billion over the next five years in its Venezuelan joint ventures, aiming to more than double its production to roughly 600,000 bpd compared to 2026 levels. Italian energy company Eni is also planning to scale up its Venezuelan operations.
However, bond price gains have been tempered as creditors wait for an official government debt report and macroeconomic analysis. David Austerweil of VanEck pointed out that including PDVSA’s commercial debt and local-currency obligations could push the restructuring total to $229 billion, potentially making it the largest sovereign debt restructuring in history. For creditors, the revival of the oil sector remains the single most critical factor for securing long-term debt servicing.
While private-sector investment announcements are a positive sign, Jefferies analyst Javier Kulesz emphasized that investors will ultimately need to see actual capital deployment before fully committing to the upside, given the numerous regulatory and operational questions that still remain.
