The arrest of Nicolás Maduro and the imminent return of American oil companies to Venezuela place Brazil’s already deteriorated public accounts at additional risk. The country has accumulated a primary deficit since November 2014 and saw the deficit of federal state-owned companies triple in 2024 — jumping from 0.02% to 0.06% of GDP between May and November.
The threat now is the fall in Petrobras’ dividends. With companies like Exxon Mobil and Chevron back in the neighboring country, the global supply of oil is expected to increase, bringing down prices and reducing the state-owned company’s transfers to the National Treasury.
The scenario, however, is not just one of risks: the American sanctions maintained by Donald Trump block Venezuelan exports and open a window for Brazil to become an alternative supplier of oil to China in the short term.
The Brazilian fiscal history shows that this is a structural fragility, not a cyclical one. According to the Central Bank, there was only a brief respite between the end of 2021 and the beginning of 2023, when the post-pandemic economic recovery and extraordinary revenues generated a temporary surplus. The deterioration, however, returned with force — and a drop in Petrobras’ dividends would make this hole even deeper.
Reopening of Venezuela could reduce transfers to the Treasury
The possible return of American oil companies to Venezuela gains relevance precisely in this context of fiscal fragility. With Maduro imprisoned, Delcy Rodríguez, former vice president and influential figure in the oil industry, assumed the Venezuelan presidency. Pragmatic, she has signaled her willingness to cooperate with the United States and create conditions for American companies to explore the largest oil reserves in the world.
The return for these companies can be quick. If oil companies like Exxon Mobil resume large-scale operations, global oil supply will increase and put downward pressure on prices. Projections from industry analysts indicate that Venezuela could once again produce 3 million barrels per day — today it produces less than 1 million.
The impact for Petrobras would be direct. As oil exports are one of the state-owned company’s main sources of revenue, lower prices mean lower profits and, consequently, fewer dividends for the Union — further worsening the Brazilian fiscal situation.
Luís Garcia, partner at tax consultancy Tax Group, highlights that Petrobras is already facing fluctuations caused by global production and internal governance issues. “The government’s fiscal fragility and its alignment with the former Venezuelan dictatorship may also limit Brazil’s access to contracts and investments”, he states.
American sanctions open window for Brazilian exports
In the short term, however, Brazil could win. The economic sanctions maintained by Trump create an immediate commercial opportunity: with a significant part of Venezuelan production destined for China blocked, the country could become the main alternative supplier of oil to the Asian giant.
In practice, the sanctions mean that a large part of Venezuelan exports remain banned — including the oil that supplied China, its main buyer before the restrictions.
Jean Paul Prates, former president of Petrobras, sees a strategic window there. “The backup for Venezuelan oil for China will be Brazil,” he told CNN.
Replacement, however, is neither automatic nor simple. Venezuelan oil is heavy and rich in sulfur, used by the Chinese to manufacture bitumen in construction. The Brazilian, in turn, is lighter and of better quality. Still, while the sanctions last, there is considerable room for Brazil to expand its exports.
Lower prices alleviate inflation, but affect investments
The effects of the eventual resumption of Venezuelan production vary depending on the time horizon. In the short term, sanctions work in Brazil’s favor, redirecting Chinese purchases and increasing national oil exports.
In the medium term, the scenario is reversed. The increase in global supply drives down prices, reducing Petrobras’ margins and revenues. In cascade, dividends to the federal government also fall, and the state-owned company’s investment plans may be revised or postponed.
Not everything, however, is negative. Cheaper fuels tend to reduce inflation and ease pressure on interest rates — a relief for consumers and the Central Bank’s monetary policy. On the other hand, the redirection of investments to Venezuela could affect the B3 (Brazilian stock exchange), while national companies will face fierce competition from large American companies.
Opportunities for Brazilian companies and professionals
In addition to the oil itself, there are opportunities in rebuilding Venezuelan infrastructure. Decades of mismanagement have depreciated gas pipelines, refineries and port facilities. Equipment was vandalized, essential components disappeared, and maintenance was simply abandoned.
For Vitor Sousa, analyst at Genial Investimentos, this deterioration represents a business opportunity. “Assets can come to the market at very low prices, generating profitable possibilities for Brazilian companies and investors”, he says. It’s not about starting from scratch, but about recovering and modernizing an already installed infrastructure.
Brazil has another important asset: accumulated knowledge. Petrobras has operated for years in Venezuela, and Brazilian executives from the state-owned company and companies in the oil and gas sector know the local market well — a difference that could be decisive in the dispute for contracts.
Ricardo Inglez de Souza, a specialist in International Trade, sees the scenario with cautious optimism. “The trend is for prices to stabilize and, eventually, reduce to more reasonable levels, with more stable trade regionally and globally.”
Restoration of Venezuela will take years
Optimism, however, needs to be tempered with realism. Even with political stability, the full resumption of Venezuelan production will take time and billions of dollars. Estimates from consultancy Argus indicate that complete restoration would take years.
Gustavo Vásquez, responsible for oil pricing in the Americas at Argus, highlights that the infrastructure is largely deteriorated. There is yet another challenge: since the 1990s, the industry has suffered from a massive loss of technical talent — employees were laid off from the Venezuelan state oil company PDVSA (Petróleos de Venezuela) for political reasons, and gathering qualified labor will be another obstacle.
Despite the uncertainties, the market is already reacting. Since Maduro’s arrest, shares in Chevron and Exxon Mobil have risen, reflecting bets on a return to the country. Companies, however, will only enter with solid guarantees of legal stability and a favorable business environment.
