Venezuela’s economy plunged into uncertainty after Maduro abduction

As the fallout from the United States’ abduction of Venezuelan President Nicolas Maduro continues to unfold, an immediate question is how his ouster will impact Venezuela’s economy.

A lot will depend on any relief in US sanctions on Venezuela, relations between Maduro’s replacement and the US, and, perhaps most crucially of all, what happens to revenues from Venezuela’s vast oil reserves, according to analysts.

Since Maduro’s capture on Saturday, the US has issued a series of announcements about Venezuela’s oil, the world’s largest known reserves, at lightning speed.

On Wednesday, US President Donald Trump’s administration, which has threatened Venezuela’s interim government with further consequences if it does not cooperate with its demands, said Washington would control Venezuela’s oil sales “indefinitely”.

US Energy Secretary Chris Wright said the US had already started marketing the sanctioned oil, held in storage until now due to the US embargo on Venezuelan exports, and that it planned to control all future sales.

Proceeds from those sales will be held in US Treasury accounts, with the money to be shared between the US and Venezuela, Wright said, without offering further details, including what proportion of the proceeds would go to Caracas.

Wright’s comments came a day after the Trump administration said it had struck a deal with Caracas to export up to $2bn worth of Venezuelan crude to the US, under which Venezuela will be “turning over” between 30 and 50 million barrels of sanctioned oil.

In the longer term, the Trump administration is likely to ease sanctions on the importation of Venezuelan oil “and eventually [the] import of equipment and capital”, Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, told media.

Trump, who has claimed that US oil companies are primed to invest billions in Venezuela’s oil sector, will likely issue licences to specific US businesses, facilitating an influx of foreign investors who can provide capital, equipment and expertise, Ziemba said.