Venezuela matters less as a case in itself than as a signal of how energy is being repositioned amid intensifying US-China competition
The United States’ forcible removal of Venezuelan president Nicolas Maduro from power has reignited a debate over international law and sovereignty. But this risks obscuring a more consequential fact: global energy markets are not governed primarily by liberal market logic, but are shaped by geopolitical strategy.
Venezuela matters less as a case in itself than as a signal of how energy is being repositioned amid intensifying US-China economic competition.
For decades, many assumed that energy markets, though imperfect, ultimately responded to supply, demand and price signals. That assumption is becoming harder to sustain. Energy functions less as a neutral commodity and more as a strategic asset, deployed alongside sanctions, trade restrictions and security partnerships.
Venezuela’s removal from the global energy system did not begin with recent events; it has been developing for years. Recent developments confirm, rather than create, this reality.
Venezuela holds the world’s largest proven oil reserves. Yet its production and export capacity have long been constrained, not by geology but by sanctions, financial isolation and political confrontation. As a result, Venezuela has been marginalised in global energy flows. This has reshaped supply chains, redirected investment and altered strategic calculations.
From a political economic perspective, major confrontations rarely begin with open conflict. They are typically preceded by precautionary adjustments: efforts to secure alternative supplies, reduce exposure and manage risk. Energy sits at the centre of this process. The US tendency to treat energy flows as a geopolitical variable rather than a market outcome reflects this logic, and will deepen particularly as its economic rivalry with China grows.
The implications of this become clearer when viewed from Asia. According to the US Energy Information Administration (EIA), roughly 80 per cent of Middle Eastern oil exports flow to Asia, with China, Japan and South Korea among the largest recipients. This makes the Middle East not merely a zone of instability, but a strategic artery for Asian industrial economies. Any disruption, even the perception of risk, carries consequences far beyond the region.
References to the Middle East in this context should not be read as predictions of imminent conflict. Rather, they reflect how energy planning increasingly incorporates the possibility of disruption. From Washington’s perspective, insulating the US economy from external energy shocks has become a priority when global tensions remain fluid. Pre-positioning supply, diversifying sources and reducing vulnerability are not signs of escalation, but of precaution.
In this framework, Venezuela serves as a signal rather than a singular cause. Its exclusion from global energy markets reduces supply diversity when energy security is becoming inseparable from national security. For the United States, this reinforces a broader trend towards managing energy through alliances, sanctions and selective access rather than through open market integration. It also shifts strategic attention towards other energy-producing regions whose output is critical for Asian demand.
The Middle East therefore occupies a central place in contemporary energy calculations, not because conflict is inevitable, but because risk sensitivity has increased. Energy markets react not only to shortages, but also to insurance costs, shipping routes, regulatory uncertainty and geopolitical signalling. In such an environment, even limited tensions can have outsize economic effects.
Iran’s relevance within this landscape lies less in the likelihood of confrontation than in its structural role in regional energy and security dynamics. Its geographical position, ideological posture and regional networks make it a persistent variable in energy risk assessments, even in the absence of direct conflict. For Washington, this represents a long-term strategic constraint; for Beijing, it offers diversification and optionality in a system increasingly shaped by political filters.
This reflects a broader erosion of the liberal promise of depoliticised energy markets. Institutions built on assumptions of neutral exchange are struggling to adapt to a reality in which sanctions, security guarantees and strategic rivalry determine outcomes. The US EIA has repeatedly noted that geopolitical events exert a disproportionate influence on price volatility, often independent of physical supply changes.
This does not imply an imminent global energy crisis, nor does it suggest markets have ceased to function. Instead, it signals a reordering of priorities. Governments are increasingly willing to accept higher costs and inefficiencies in exchange for strategic insulation. Supply resilience, political alignment and controllability are displacing price as the dominant concern.
For China and other East Asian economies, this poses a structural challenge. Growth models built on predictable energy access now operate under heightened uncertainty. Diversification, stockpiling and long-term contracts provide partial mitigation, but cannot fully substitute for systemic stability. As the World Bank has warned, energy insecurity carries downstream effects for inflation and growth – and therefore social stability.
Seen from this perspective, Venezuela’s removal from the global energy landscape is less an anomaly than a confirmation. Energy is not merely traded; it is managed, constrained and strategically positioned. The central question for policymakers is not whether this is desirable, but whether it can be reversed.
The Venezuela episode reinforces energy’s status as a geopolitical asset rather than a mere market commodity. Whether its government survives is secondary to what the case reveals about how global energy flows are structured.
In an era of intensifying US-China economic rivalry, it is important to recognise that energy security is not achieved through openness alone, but through strategic positioning and risk management. The world is not witnessing the collapse of energy markets, but increased sensitivity to the role that geopolitics plays in setting the terms.
