Venezuela is an oil-rich country in South America ruled by the United Socialist Party (PSUV). It has the world's largest oil reserves, along with vast gas fields and critical minerals. In the 1960s and 1970s Venezuela was hailed as a model democracy. Then the oil price crashed, and Venezuela's democracy fell with it. Hugo Chávez, an army officer, exploited the discontent, staging a failed coup in 1992 before being elected president in 1998 and launching a nationalist and socialist revolution. After he died in 2013 his chosen successor, Nicolás Maduro, inherited what The Economist called "a rotting system" and made it worse. His regime jailed, tortured and killed opponents; its corruption and economic policies led to empty shelves, power cuts and inflation that peaked at 130,000%. More than 8m Venezuelans have been forced to flee the country.
The PSUV controls 253 of the 285 seats in the National Assembly, as well as 23 of the country's governorships. The country also claims Guayana Esequiba, an area bigger than Greece that makes up two-thirds of neighbouring Guyana; the regime decreed it be added to official election maps in 2023 and appoints a "governor" for the territory, chosen by voters in Venezuela's Bolívar state. In May 2025 it held a vote asking Venezuelan voters to elect a governor for the territory over which it has no control. The United States firmly backs Guyana on the dispute.
In the July 2024 presidential election, opposition candidate Edmundo González, backed by María Corina Machado, won 67% of the vote according to official voting-machine printouts, but the regime's electoral authority declared victory for Mr Maduro. Hundreds of government critics were subsequently imprisoned. Mr González went into exile; Ms Machado went into hiding. In the May 2025 parliamentary elections, turnout was officially claimed at 43%, but Meganálisis, a pollster, put the real figure at 14%. Ms Machado had called for abstention.
Mr Maduro has said he intends to change the constitution to move towards a "communal" electoral system, in which elected offices, including the presidency, might be chosen by loyalty-vetted "communes" rather than through the representative vote.
Venezuela is a petrostate. It sits on 300bn barrels of oil—more than Saudi Arabia—but owing to years of mismanagement pumps a piddling 1m barrels per day, less than war-torn Libya. Chevron, the American oil giant, exported around 240,000 barrels per day of crude from its Venezuelan operations until its licence expired on May 27th 2025. Mr Maduro's predecessor nationalised the industry in 2007. The breakeven price for the main Venezuelan projects exceeds $80 a barrel, according to Wood Mackenzie. Rystad Energy estimates that reviving production to 2m barrels per day, a level last attained in 2018, would require annual investments of $12bn up to 2032.
The state oil company PDVSA must now take over 100% of Chevron's operations. Francisco Monaldi at Rice University forecasts an overall production drop of 80,000–150,000 barrels per day in the following 12 months, and a financial hit of about $5bn a year—around 30% of the country's oil revenue. Between 2019 and 2023 the regime sold its oil on the black market at a discount owing to American sanctions.
The vast majority of Venezuela's 300bn barrels of reserves are "extra heavy"—too viscous to flow like conventional crude. Extracting them is hard, costly and polluting, and the breakeven for flagship new projects exceeds $80 a barrel. Decades of underinvestment have caused production to fall by two-thirds since the late 2000s. Venezuela is chronically short of naphtha, a dilutant it needs to make its super-gloopy crude transportable. The heavy, sour crude the country produces is precisely the type of which American refineries are chronically short. PDVSA, the 70,000-strong state oil company, is largely run by the armed forces and has suffered a huge brain drain: tens of thousands of skilled workers, from engineers to geologists, have left the country, many to Canada. In December 2025 America declared a blockade on Venezuelan shipments; exports cratered and the volume of crude floating on idle tankers hit multi-year highs. In its most optimistic scenario, Kpler, a data firm, forecasts that output might rise to 1.7m-1.8m barrels per day by 2028. Rystad Energy estimates that $110bn in capital expenditure would be required by 2030 to restore production to where it was 15 years ago—twice the amount America's oil majors combined invested worldwide in 2024.
The government has defaulted on all but two of its loans since 2017. It owes at least $95bn, or 115% of GDP, to three groups of creditors. The biggest group is private bondholders, owed at least $60bn including arrears; many are distressed-asset investors such as Elliott Management. A second group is oil companies whose assets were nationalised in the 2000s under Hugo Chávez. In 2019 a court ordered Mr Maduro to pay $9bn to ConocoPhillips, an American firm; the sum has since risen to $12bn including interest. In total, Venezuela owes $22bn to oil companies. The third group is China, which is owed $16.5bn—nearly all the country's bilateral debt. Since 2007 China has lent Venezuela $60bn, demanding oil at a discount as repayment. No loan like China's instrument in Venezuela has been restructured before. After Mr Maduro's capture, ten-year-bond prices rose from 33 to 43 cents on the dollar—the biggest move since 2023, when America lifted a ban on trading the country's assets. The IMF forecasts GDP will shrink by 3% in 2026, owing to falling oil sales.
Nicolás Maduro gives the army a free hand to work with gold-mining mafias in return for political loyalty. When Brazil clamped down on illegal gold miners (garimpeiros), many simply moved to Venezuela, where it is easier to cut deals with the army.
Between 1950 and 1980 Venezuela had the lowest rate of inflation in the world. A total of 14 zeros have been removed from Venezuelan banknotes since 2007. In 2019 prices were tripling every month. That year the regime allowed informal use of the dollar and lifted import restrictions, which helped stabilise the economy. But in 2025 the bolívar began to slip again: as of July 22nd 2025 the official rate was down 56% against the dollar, with the black-market rate 30% lower still. Bank of America forecast inflation of 530% for 2025.
The shortage of dollars worsened after the Trump administration let Chevron's licence to operate in Venezuela lapse on May 27th 2025. Francisco Monaldi of Rice University called Chevron "the most important supplier of dollars to the private companies in the Venezuelan foreign-exchange market."
In June 2025 the regime arrested several economists and consultants who had been tracking inflation and exchange rates, including Rodrigo Cabezas, a finance minister under Chávez. In May it arrested 20 people associated with Monitor Dólar, a website that published black-market rates; the site was taken offline.
Mobile-phone applications such as Binance and Airtm let Venezuelans exchange currencies, fiat or crypto, at rates set by an active market. Businesses often use these platforms to rid themselves of bolívars as soon as they receive any, before the currency's value slides again. These digital markets are beyond the regime's control.
The United States does not recognise Mr Maduro as a legitimate head of state. In July 2025 the Trump administration designated the Cartel de los Soles, supposedly based in Venezuela's armed forces, as a terrorist outfit, naming Mr Maduro as its leader, and doubled the bounty on his head to $50m. Mr Trump signed a directive permitting military force against drug gangs abroad. Earlier in 2025 relations had appeared to be improving—Venezuela freed several Americans, Chevron resumed oil shipments, and in January Mr Trump had dispatched an envoy to Caracas—but the about-turn was swift.
From August to November 2025 the United States mounted the largest military build-up in the Caribbean since the Cuban missile crisis of 1962, according to CSIS. The flotilla eventually included the USS Gerald Ford, the world's largest aircraft-carrier, ordered south by Pete Hegseth. By late October 14 American air strikes on boats allegedly linked to drug-smugglers had killed an estimated 61 people; many legal experts called the strikes illegal. Admiral Alvin Holsey, SOUTHCOM's commander, departed over disagreements with Mr Hegseth. A dormant base in Puerto Rico was reopened.
The administration reframed drug gangs as terrorists to justify the use of force and linked Mr Maduro directly to the Cartel de los Soles. Marco Rubio, the secretary of state, calls drug gangs the "al-Qaeda of the western hemisphere". It ended "temporary protected status" for some 600,000 Venezuelan asylum-seekers and began sending deportees back. On November 20th the Cartel de los Soles was designated a Foreign Terrorist Organisation, though many legal scholars doubted this provided authority to strike Venezuela. Parts of the Venezuelan armed forces are involved in drug trafficking, though there is little evidence the Cartel de los Soles is an organised gang run by Mr Maduro.
In response to the American build-up, Mr Maduro began enrolling what he claimed would be 4.5m militiamen (election receipts show he received fewer than 3.8m votes in the 2024 presidential election). Diosdado Cabello, the interior minister, deployed 15,000 troops to states near the Colombian border and threatened to round up anyone who called for American sanctions or intervention. By mid-October missile launchers had appeared at Caracas's military airport and along the Caribbean coast.
Ms Machado masterminded the 2024 opposition campaign. The regime had blocked her from seeking office herself, so she backed a stand-in candidate, former ambassador Edmundo González. Millions who would have voted for her voted for him. She set up a system whereby thousands of volunteers collected original election receipts from almost every polling station on election day; the paper trail proved that Mr González won by a huge margin.
Five senior members of Ms Machado's electoral-campaign team escaped from the Argentine ambassador's residence in Caracas in May 2025, where they had been sheltering since March 2024 with state security forces patrolling outside.
From her hiding place, Ms Machado has insisted that the end of Mr Maduro's rule is near, claiming that "the cracks and fractures within the regime are growing." Diplomats in Caracas are more sceptical, noting that the country is "ruled like a mafia" and that any discontent in the lower military ranks has been swiftly snuffed out by counter-intelligence teams.
With the help of Cuban intelligence, Mr Maduro has ramped up a purge of suspected opponents. Dozens of military officers deemed disloyal are in jail, many tortured, their families threatened and imprisoned too. Few will risk coming out against Mr Maduro until they are sure he is on his way out. Any intervention would also have to contend with remnants of the regime—army units, the colectivos (armed militia-cum-community organisations) and state-security agents—as well as criminal groups and Colombian insurgents operating in Venezuela. Ms Machado told Bloomberg she backs the escalation and says she has plans for the first 100 hours and first 100 days of a transition. If Mr Maduro falls, foes such as Cuba and Nicaragua would probably lose access to subsidised Venezuelan oil and be destabilised.
In the early hours of January 3rd 2026 more than 150 American aircraft from 20 different bases swooped over Caracas, including low-flying helicopters carrying special forces. America's new cyber-strategy document cites the operation, claiming that cyber-tools left government forces "blind and uncomprehending" during the raid—probably an allusion to a reported cyber-attack that may have cut power to parts of Caracas. The raiders battled and killed 32 of Mr Maduro's Cuban bodyguards before capturing him as he tried to enter an armoured safe room. In less than three hours Mr Maduro and his wife, Cilia Flores, were taken to an American warship offshore. Not a single American died. Trump watched the operation by video link from Mar-a-Lago. The couple are now in New York awaiting trial on drug-trafficking charges.
Under Mr Maduro's rule GDP contracted by 70%—the largest economic contraction ever recorded in peacetime—and oil production fell almost as far. When Mr Maduro came to power in 2013, Venezuelans were four times richer than they were at the time of his capture. Fully a quarter of the population left in search of a better life elsewhere.
Two days after the raid, on January 5th, Delcy Rodríguez, the vice-president, was sworn in as acting president. She declared seven days of mourning. Diosdado Cabello, the interior minister, dispatched colectivos—armed pro-regime vigilantes on motorbikes—to patrol the streets and set up roadblocks as a signal that there was no power vacuum. Vladimir Padrino, the powerful defence minister, backed Ms Rodríguez. On January 5th shots rang out around Miraflores, the presidential palace, prompting speculation of a putsch, but the shooting came from a jumpy security unit firing at one of its own drones.
Trump declared that he had updated the Monroe Doctrine into the "Donroe doctrine", asserting America's right to intervene in the western hemisphere as it sees fit. He said Venezuela would "turn over" up to 50m barrels of oil, worth around $2.8bn, to America, with proceeds "controlled by me". Chris Wright, the energy secretary, said America would sell Venezuela's production "indefinitely, going forward." PDVSA, Venezuela's state-owned oil firm, confirmed it was in talks with America on oil sales.
A deal imposed by Trump in mid-January allowed oil to flow again after weeks of blockade had left storage facilities almost full and production curbed. The initial tranche covers roughly 30m barrels—approximately the capacity of Venezuela's crude storage. Vitol and Trafigura, two Swiss-based commodity traders, obtained American licences to transport and market Venezuelan crude. Under Venezuelan law, 20-30% of revenues are wired in dollars to the state as royalties; the rest flows into escrow accounts at international banks. An executive order designates the cash as "sovereign property of the Government of Venezuela held in custody by the United States, and not as the property of the United States". Marco Rubio, the secretary of state, will determine how to spend it on Venezuela's behalf. Trump has said all future capital spending must be on American-made equipment.
A poll of 600 Venezuelans commissioned by The Economist from Premise, a research firm, found that just 13% even mildly opposed Mr Maduro's capture; more than half said their opinion of America had improved. Nine in ten wanted the results of the 2024 election to be respected or a fresh vote within a year; two-thirds wanted new elections, with most of those demanding them within six months. Only 10% agreed that Delcy Rodríguez should complete Mr Maduro's term. Trump and Rubio have higher approval ratings in Venezuela than María Corina Machado—and higher there than in America. Trump dismissed María Corina Machado, who won the Nobel peace prize, as "a very nice woman" who did not command sufficient respect to run the country, and did not mention Edmundo González. A CIA briefing reportedly concluded that Ms Rodríguez or other regime figures were best placed to run an interim government. Elliott Abrams, Trump's former Venezuela envoy, argued that only a transition to democracy could provide the stability required to attract the investment needed to unlock Venezuela's oil reserves—the world's biggest if vast, viscous, largely untapped tarry deposits are taken into account.
Since Mr Maduro's capture some $300m has flooded into Venezuela's banking system, the initial proceeds from Trump's oil deal bringing 30m-50m barrels of Venezuelan crude to market. The gap between the official and parallel exchange rates, which had widened greatly, shrank to about 20%. On January 22nd 2026 the National Assembly gave initial approval to changes to the hydrocarbons law, which currently favours PDVSA; the reform would give private companies more control over the production and sale of oil, cut some royalties and allow independent arbitration of disputes. Mining law is to be reworked next.
The regime has freed about 700 political prisoners since January 2026, including Rafael Tudares, the son-in-law of Edmundo González. But about 500 remain behind bars and most releases are conditional: freed prisoners must report regularly to the police and have charges hanging over them. A much-touted amnesty law is being applied selectively. Hardliners such as Diosdado Cabello and Vladimir Padrino remain in office. Delcy Rodríguez sacked Álex Saab, the minister of industry and Mr Maduro's former "fixer", previously imprisoned in the United States for money-laundering; foreign oil executives had complained it was "awkward" to deal with an ex-convict. Ms Rodríguez has overhauled her cabinet and the leadership of the army, though the most senior figures remain untouched.
The American embassy in Caracas reopened on March 30th 2026. Before that, the American mission had been operating largely from the 17th floor of the JW Marriott hotel. Giant photos of Nicolás Maduro hugging his wife still loom over Caracas's motorways, tagged #WeWantThemBack, but nobody talks about him—even people inside the government avoid mentioning him.
Teachers have begun marching for higher wages—unthinkable before Mr Maduro's capture. Members of Vente Venezuela, María Corina Machado's political party, have started meeting more openly; organisers who had been in hiding for more than a year emerged weeks before April 2026. Opposition volunteers believe elections could take place in nine months. A possible investment boom has stirred such excitement that the Caracas Country Club has more than doubled its membership fee since January 2026, to over $120,000. Many in business, however, are sceptical of the wisdom of pushing for elections soon, arguing that the courts and electoral authority need overhauling first and that instability could be worse for business than the current American-backed authoritarian regime.
Four in five Venezuelans think the political situation will be better within a year. On January 28th María Corina Machado met Marco Rubio and said the regime was being forced to "dismantle itself". Scott Bessent, the treasury secretary, said: "When we believe it is time, there will be free and fair elections." Mr Rubio described a three-stage plan—stabilisation, recovery and transition—and cited Spain and Paraguay as examples of transitions from autocracy; one took seven years, the other almost 20. He praised Ms Rodríguez and said the United States did not expect to use military force to maintain her compliance. But an extended timeline is just what the regime is counting on; with fear ebbing, impatience rising and economic pain biting, it is far from clear that Venezuelans will quietly wait three more years for a vote.
Venezuela's mobile-phone networks rely on technology from Huawei and ZTE, two Chinese telecommunications giants. ZTE also developed Venezuela's "Fatherland Card" system, which is used to track voting patterns, monitor social media and ration food. Another Chinese firm provided the Maduro regime with an internet censorship system. One Chinese joint venture alone accounts for more than 10% of Venezuela's oil production.
Venezuela has been the biggest recipient of official Chinese loans and grants in South America, accepting about $106bn between 2000 and 2023, according to AidData at the College of William and Mary, much of it flowing to infrastructure and energy projects. China upgraded its relationship with Venezuela to an "all-weather" partnership in 2023. Venezuela has been the biggest buyer of Chinese weapons in South America, including JY-27 air-surveillance radars that appear to have offered little help to Mr Maduro. China gets about 5% of its oil imports from Venezuela, but that accounts for roughly 80% of international demand for Venezuelan crude. In recent years China shifted its focus to restructuring debt because of Venezuela's economic troubles and became indispensable as one of the few countries defying American sanctions. Just hours before Mr Maduro was captured, he received a delegation led by Xi Jinping's special envoy for Latin America. China's public response to the raid was limited to condemnation.
More than 8m Venezuelans have left the country. The Venezuelan diaspora in America comprises two distinct groups: educated pre-Maduro arrivals who assimilated into Cuban-exile communities, particularly in Doral, Florida—home to more Venezuelans than anywhere else in the country—and vulnerable recent arrivals who dispersed to cities across the United States. Venezuelan-Americans voted overwhelmingly for Trump in 2024, partly because of his anti-Maduro stance. Trump subsequently eliminated Temporary Protected Status for Venezuelans, making some 600,000 subject to deportation.
On January 7th 2026 American forces seized two tankers, the Bella 1 (repainted as the Marinera and re-registered under a Russian flag) and the M Sophia. The Bella 1 had moved more than 20m barrels of Iranian oil and 5m barrels of Venezuelan oil to China since late 2020, with profits allegedly funding Hizbullah and Iran's Quds Force. Over the preceding six months more than a dozen tankers under American sanctions had switched their affiliation to Russia, presumably to deter seizure. Sixteen tankers carrying Venezuelan oil attempted to break the American blockade by sailing out en masse. Marco Rubio said the oil embargo would be maintained to force the post-Maduro regime to submit.
Indecision is the true basis for flexibility.