‘Big Short’ investor says Venezuela’s regime change means Russia’s oil ‘just became less important’

Burry, who correctly predicted the subprime mortgage crisis in 2008, said Russia may face consequences after the U.S. toppled Venezuelan President Nicolás Maduro early Saturday, the investor wrote in a post on his Substack newsletter, Cassandra Unchained. 

Shortly after Maduro’s capture, President Donald Trump said the U.S. would be more involved with the country’s abundant oil reserves. He put the onus on U.S. oil companies to improve Venezuela’s oil infrastructure with billions of dollars of investment and claimed the U.S. will sell the oil to other countries.

Although this may take five to seven years, Burry estimated, increasing the flow of Venezuelan oil could undercut Russia’s income and influence.

“Russia oil just became less important in the intermediate and long -term,” wrote Burry.

Venezuela contains about 19% of the world’s oil, an estimated 300 billion barrels that dwarfs the U.S.’s 61 billion barrels, according to the Energy Institute. Yet, partly because of outdated infrastructure, mismanagement, and U.S. sanctions, the country pumps only a fraction of what it has the potential to produce.

Because it has the world’s largest reserves, increasing its oil output could affect the commodity’s price globally, said economist and Boston College associate dean Aleksandar Tomic.

If oil prices drop due to increased global supply via Venezuela, Russia may be weakened because oil is its “lifeline,” he told Fortune. Despite U.S. sanctions, Russia exports oil to countries such as China and India.

If prices drop due to increased Venezuelan production, Russia may have more to lose than any other country because of its expensive war on Ukraine, he added. Its oil and gas industry makes up about 20% of the country’s GDP on average, according to the Oxford Institute for Energy Studies.

“[Oil] is what’s funding their war effort, so it’s pretty crucial to Russia,” Tomic said. “It would be a pretty significant blow to them if the price of oil was to collapse, if, say, the U.S. was to flood the market with Venezuelan oil.”

To be sure, it’s unclear who will lead Venezuela in the future and how its oil reserves will be managed. Despite Trump’s claim that the U.S. will “run” Venezuela, the president has offered scant details on how the U.S. will be involved in administering the country. Venezuelan Vice President Delcy Rodriguez was sworn in as interim president following Maduro’s capture.

It is also unknown if American oil companies would jump to reestablish operations in Venezuela, said Tomic. Both ConocoPhillips and ExxonMobil retreated from the country in the early 2000’s and have since sought to recoup losses for their expropriated assets through international arbitration. 

And increased oil production in Venezuela could lower prices, which would also hit American companies’ profits, Tomic said.

Chevron is the only American oil company operating in the country. CEO Mike Wirth last year reiterated the company’s support for rebuilding Venezuela’s economy “when circumstances change.” 

A spokesperson for ConocoPhillips said the company was monitoring the developments in Venezuela and their potential global energy implications.

“It would be premature to speculate on any future business activities or investments,” the spokesperson said in a statement to Fortune.

Exxon Mobil did not immediately respond to Fortune’s request for comment. 

Still, the potential for American companies to grab a slice of Venezuela’s large oil reserves is tempting, in part because American oil production is expected to peak in 2027 and then hold at high levels for a decade before rapidly declining, the U.S. Energy Information Administration predicted. 

“As American (sic) brings its Big Oil companies to Venezuela, with relatively close refinery assets, there will be a global shift in energy geopolitics,” Burry wrote.