For much of the 20th century, Venezuela was synonymous with oil abundance and relative prosperity in Latin America.
The country holds the world’s largest proven oil reserves—an asset that shaped its economic model, foreign policy, and the very structure of the State. This wealth, however, also created an almost absolute dependence on crude oil, reducing incentives for economic diversification and making the country extremely vulnerable to international price shocks and internal policy mismanagement. From the late 1990s onward, with the rise of Chavismo, oil ceased to be merely an economic resource and became a central political instrument, used to finance social programmes, consolidate internal power, and sustain international alliances.
Over the years, the combination of nationalisations, excessive state control, capital flight, structural corruption, and institutional deterioration eroded the productive capacity of Venezuela’s oil industry. PDVSA, once one of the world’s most efficient energy companies, lost technical expertise, access to technology, and investment capacity.
When international sanctions intensified—particularly from the mid-2010s onward—the country was already economically fragile. The result was a prolonged collapse in production, currency value, purchasing power, and living conditions, triggering one of the largest migration crises in recent Latin American history.
Although Venezuela today represents a relatively small share of global daily oil production, its latent potential remains enormous. Any structural change in the control, management, or geopolitical alignment of its reserves is enough to shift expectations, influence prices, and redefine the strategies of major global players. In the short term, instability is likely to further constrain Venezuelan production and exports. Degraded infrastructure, lack of investment, and legal uncertainty hinder any rapid recovery. This scenario contributes to volatility in international oil prices at a time when the market is already under pressure from regional conflicts, an incomplete energy transition, and restrictive monetary policies in major economies.
“Any structural change in the control, management, or geopolitical alignment of Venezuela’s oil reserves is enough to alter expectations, influence prices, and redefine the strategies of major global players.”
However, in the medium to long term, the outlook could change significantly. If there is a political reconfiguration in Venezuela that allows for large-scale inflows of foreign capital, technology, and professional management, the country could gradually recover part of its productive capacity. This would have direct implications for global prices, potentially exerting downward pressure on crude oil and altering the balance of power within and beyond OPEC.
Mozambique depends heavily on fuel imports to sustain its economy, transport sector, and industrial production. Significant fluctuations in international prices have a direct impact on inflation, the cost of living, and external accounts. A scenario of cheaper oil—driven by a potential future recovery of Venezuelan production—could ease pressure on Mozambique’s trade balance and reduce costs for consumers and businesses.
Despite this potential relief, Mozambique’s energy trajectory faces structural risks that warrant close attention. In particular, the strong reliance on liquefied natural gas (LNG) as an economic pillar raises risks similar to those faced by Venezuela: excessive dependence on a single resource, vulnerability to external shocks, and institutional challenges. The Venezuelan experience shows that without diversification, transparency, and sound governance, energy wealth can become an economic burden.
It is crucial that Mozambique avoids repeating this cycle by balancing investment in gas with strategies for sustainable development and institutional strengthening. Ultimately, the Venezuelan crisis serves as a global warning: natural resources are instruments of power, but also traps when poorly managed. For emerging economies, the lesson is clear—sovereignty, diversification, and strong institutions are essential to transform wealth into lasting development.
