Venezuelan Oil Stopped Flowing Due to the Loss of a Functional Institution
The world's most oil-rich country exports negligible amounts of oil because its only functional economic institution, the state oil company, became a casualty of domestic political conflict.
At over 300 billion barrels, Venezuela has the largest proven oil reserves of any country in the world, including even Saudi Arabia, and its reserves make up around 17% of total global proven reserves.1 It also has 195 trillion cubic feet of natural gas reserves, comparable to the remaining proven shale gas reserves of the Permian Basin in the southwestern United States, which stand at 229 trillion cubic feet.2 These reserves are three-quarters of the total gas reserves discovered in Latin America to date and are the ninth-largest gas reserves globally. Venezuela’s domestic energy needs beyond the oil and gas sector itself are relatively small and its electricity is mostly generated by hydropower. Given the size of its reserves, the country ought to be one of the world’s largest oil and gas exporters, comparable to Saudi Arabia, and consequently a prosperous country with rising living standards. But in 2023, Venezuela produced just 0.8% of the world’s oil.3 With an estimated GDP per capita, adjusted for purchasing power parity, of just $8500, it is also the poorest country in South America.4