What a US invasion of Venezuela would mean

BARRING a sudden change of heart by US President Donald Trump, the world will soon witness US imperialism’s bullying of a hapless Third World country: Venezuela. The US’ real motive for this blatant aggression is not as Trump claims America’s need to defend itself from the invasion of illegal drugs. Its inarguable purpose is the same as that for invading Iraq in 2023, which threw the Middle East into the chaos we see today.

The US motive is to secure forever its supply of oil, as Venezuela has the largest proven oil reserves in the world, more than Saudi Arabia or Canada. However, Trump’s move would be another development — after the Russia-Ukraine war and the Israeli genocide of Palestinians in the Gaza Strip — in a volatile mix of global geopolitics that could even lead to global thermonuclear war.

As always, Philippine media’s reportage of this imperialist move has been scant, relying on the US-controlled news agencies, and on hard news bereft of explaining what all this means. Because of this, I am devoting my column to a transcription of a recent speech posted on YouTube by a renowned expert on geopolitics, Yanis Varoufakis, a respected Greek economist and geopolitical analyst. Since 2018, he has been secretary-general of the Democracy in Europe Movement 2025, a left-wing pan-European political party he co-founded in 2016.

One of Varoufakis’ possible scenarios is a military escalation with Russia as well as Brazil and Colombia defending Venezuela. China, of course, would be their silent but powerful ally. Oil prices would spike, a global financial crisis emanating from Latin America would erupt. Just as the 1980s debt crisis breaking out from the same region was really the main factor — not the Aquino assassination — for the dictator Marcos’ fall, the conflagration from a US invasion of Venezuela would finally happen in this second Marcos administration.

Varoufakis’ lecture follows

What we’re witnessing right now in the Caribbean isn’t just another regional conflict. This is a fundamental restructuring of global economic power that will have cascading effects across energy markets, currency systems and trade relationships for decades to come. And frankly, most analysts are missing the bigger picture entirely.

Let me start with what’s actually happening on the ground because the military movements tell us everything we need to know about the economic stakes involved. The United States has deployed over 12,000 troops on nearly a dozen naval vessels to Venezuelan waters. The USS Gerald R. Ford, the world’s largest aircraft carrier, arrived in the Caribbean Sea on Nov. 15. This isn’t a show of force. This is a blockade in everything but name. And blockades have one purpose: economic strangulation.

Now, why does this matter? Venezuela sits on the largest proven oil reserves in the world. We’re talking about 303.8 billion barrels. That’s more than Saudi Arabia, more than Canada, more than Russia. And for context, that represents roughly 18 percent of global proven reserves.

But here’s where it gets interesting. From an economic standpoint, Venezuela’s oil production has collapsed from 3.5 million barrels per day in the late 1990s to barely 700,000 barrels per day today. That’s an 80-percent decline in production capacity.

The Trump administration just terminated Chevron’s permit to export Venezuelan oil on Nov. 24, 2025. This was the last remaining legal channel for Venezuelan crude to reach international markets. Chevron had been the lifeline keeping what remained of Venezuela’s oil infrastructure operational. Without their technical expertise and capital investment, we’re looking at further production declines of potentially 30 to 40 percent within the next 12 months.

Tariff

But Trump didn’t stop there. He imposed a 25-percent tariff on all goods imported from any country that imports Venezuelan oil. Think about the implications of that for a moment. This isn’t just sanctioning Venezuela. This is sanctioning anyone who does business with Venezuela.

India and China have been the primary buyers of Venezuelan crude in recent years, taking advantage of steep discounts. India was importing roughly 200,000 barrels per day of Venezuelan oil. China was taking even more, around 400,000 barrels daily.

Now here’s where the economic dominoes start falling. India relies on imported oil for 85 percent of its consumption. Chinese demand for oil sits at roughly 15 million barrels per day with domestic production covering only about 4 million. Both economies are heavily dependent on affordable energy imports to maintain their manufacturing competitiveness.

If they comply with American pressure and stop buying Venezuelan oil, they need to find alternative suppliers. That means bidding up prices in an already tight global oil market. If they don’t comply and continue purchasing Venezuelan crude, they face a 25-percent tariff on all exports to the United States.

For India, the US represents roughly 18 percent of total exports worth over $78 billion annually. For China, we are talking about 16 percent of exports valued at more than $500 billion.

The economic calculus here is brutal: either accept higher energy costs that reduce manufacturing competitiveness, or accept massive tariffs that price you out of the American market.

Warfare

This is economic warfare at a scale we haven’t seen since the 1970s oil embargo, and it’s happening right now.

Let’s talk about what this means for global oil prices. Brent crude is currently trading at around $87 per barrel. West Texas Intermediate is at $83. These prices reflect a market that’s already relatively tight. Global spare capacity — the amount of oil that can be brought online within 30 days and sustained for 90 days — currently sits at around 3 million barrels per day. That’s roughly 3 percent of global demand. Historically, when spare capacity falls below 5 percent, we see significant price volatility.

If Venezuelan production drops another 300,000 barrels per day due to the loss of Chevron’s technical support and expertise, and if India and China are forced to compete for alternative supplies, we could easily see oil prices spike to $120 to $140 per barrel within six to nine months.

Every $10 increase in oil prices reduces global gross domestic product growth by approximately 0.2 percentage points. A sustained move to $130 oil would shave nearly one full percentage point off global growth.

For the United States specifically, higher oil prices act as a massive regressive tax on consumers. Every 1 cent increase in gasoline prices represents roughly $1.44 billion in additional annual consumer spending on fuel. If we’re looking at crude oil moving from $80 to $130 per barrel, retail gasoline prices could jump from the current national average of $3.30 per gallon to somewhere north of $5 per gallon. That’s an additional $250 to $300 billion coming out of American consumer spending on gasoline alone.

But energy prices are just the beginning.

Let’s examine what happens when you deploy 12,000 troops and a carrier strike group indefinitely to the Caribbean. The operational cost of running a carrier strike group is roughly $6.5 million per day. That’s $2.4 billion per year just for the Ford Strike Group. But we’re not talking about one carrier. The US has deployed nearly a dozen naval vessels to the region. The total cost of this military deployment is likely running between $8 and $10 million per day, or roughly $3 billion annually if sustained.

Now, let’s talk about the elephant in the room: Russia.

Putin

On Oct. 27, 2025, Putin ratified a strategic partnership treaty with Venezuela. This isn’t just diplomatic posturing. Russian lawmakers have stated explicitly that there are no obstacles to providing Oniks or Kalibr missiles to Venezuela. The Oniks intermediate-range ballistic missile has a reported maximum range of about 3,400 miles. That’s enough to reach most of the continental United States from Venezuelan territory.

Why would Russia take this risk? Because Venezuela represents a strategic economic asset in Russia’s broader confrontation with the West.

Russian oil exports have already been heavily sanctioned since the invasion of Ukraine. Urals crude, the Russian benchmark, has been trading at significant discounts to Brent — typically $15 to $20 per barrel below international prices. Russia has been forced to redirect its oil exports almost entirely to Asia, particularly India and China.

If the United States successfully chokes off Venezuelan oil supplies and forces India and China to find alternatives, Russia becomes one of the most logical suppliers to fill that gap. Despite sanctions, Russian oil production has remained relatively stable at around 9.5 million barrels per day. They have the capacity to increase exports if there’s demand.

By supporting Venezuela militarily, Russia accomplishes multiple objectives simultaneously. First, it ties down American military resources in the Western Hemisphere. Second, it creates leverage in ongoing negotiations over Ukraine. Third, it positions Russia as a critical energy supplier to the world’s largest growth markets.

China

Think about this from China’s perspective. China imported roughly 11 million barrels per day of crude oil in 2024. They’ve been diversifying away from Middle Eastern suppliers for years, increasing purchases from Russia, Venezuela, Iran and other sanctioned producers. Why? Because sanctioned oil comes with steep discounts. Venezuelan crude has been selling for $30 to $40 per barrel below Brent prices. That’s a savings of roughly $150 million per day for China on the 400,000 barrels they’ve been importing from Venezuela.

But there’s a deeper strategic consideration. China holds over $800 billion in US Treasury securities. If the United States imposes a 25-percent tariff on all Chinese goods because China continues buying Venezuelan oil, what’s China’s response? They could dump Treasuries, driving up US borrowing costs. They could devalue the yuan, making their exports more competitive despite tariffs. They could accelerate the internationalization of the yuan as an alternative to dollar-based trade.

This last point is crucial.

For decades, oil has been priced and traded primarily in US dollars. This gives the United States enormous structural power in the global economy. Countries need dollars to buy oil, which means they need to hold dollar reserves, which means they buy US Treasury securities, which allows the US to run massive deficits without facing the same constraints other countries would face.

To be continued on Dec. 3, 2025

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What a US invasion of Venezuela would mean
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