Since the U.S. ousted Venezuelan leader Nicolás Maduro last month, oil analysts have been remembering the U.S. removal of another foreign leader more than twenty years ago. In 2003, the U.S. removed Iraqi President Saddam Hussein and occupied the country until 2011.
"A fairly rapid change of a head of state prompted by U.S. military forces is always going to bring back memories of Iraq in one way or another," says Raad Alkadiri, a managing partner at 3TEN32 Associates, a political risk consultancy, who lived in Iraq from 2003 to 2007.
But Alkadiri says there's a key difference, and that's the way the Trump administration is taking control of Venezuela's oil. It's a process that, so far, has been marked by opacity and questions over whether what the U.S. is doing is legal, oil lawyers and oil analysts tell NPR.
After the invasion of Iraq, the U.S. and the United Nations set up a system for managing Iraq's oil revenue. There was also an independent auditor to track the money. While the handling of Iraq's oil revenues involved the United Nations and independent oversight, that isn't the case with Venezuela's oil.
To date, the U.S. military has seized seven Venezuelan oil tankers. And the U.S. is selling Venezuelan oil through two Swiss oil trading firms, both of which have pled guilty to paying bribes in the past.
At a Senate hearing last week, Secretary of State Marco Rubio said that this is a short-term fix for Venezuela. "The long-term plan is not those two trading companies," Rubio said. "The long-term plan is for them to have a normal energy program that sells directly into the market."
"This was a historic deal President Trump brokered with the Venezuelan interim authorities that benefits both the American people and the Venezuelan people," wrote White House spokesperson Taylor Rogers in an email to NPR.
Here are four things to know about Iraq's oil history and what it can teach us about what could happen to Venezuela's oil.
Most big U.S. oil companies didn't invest in Iraq post invasion
U.S. oil companies helped develop Venezuela's oil fields. But around 2007, some U.S. oil companies, including ExxonMobil, left after then-President Hugo Chávez renegotiated contracts with worse financial terms for the companies. Right now, Chevron is the only major U.S. oil and gas corporation working in Venezuela.
Trump has made it clear he wants U.S. oil companies to increase investments and operations in Venezuela. In January, Trump gathered a group of oil executives in the White House and told them they would go into Venezuela and "increase oil production to levels never ever seen before."
But at that meeting, ExxonMobil CEO Darren Woods told Trump that his company could invest in Venezuela again, but only if there were new investment protections and legal structures. Until then, Woods told Trump the country is "uninvestable." Not long after that meeting, Trump said, "I didn't like Exxon's response."
The disconnect between what the U.S. government wants and what U.S. oil executives say is feasible has echoes of Iraq, says Ben Van Heuvelen, editor in chief of Iraq Oil Report.
After the invasion of Iraq in 2003, when the U.S. temporarily controlled the country, some in the Bush administration wanted to privatize Iraq's national oil companies. The U.S. installed former CEO of Shell Oil, Philip Carroll, as advisor for the Iraqi Oil Ministry. But Carroll said no to privatization. As Carroll told the BBC program Newsnight in 2005, "I was very clear that there was to be no privatization of Iraqi oil resources or facilities while I was involved."
Iraq put some of the largest oil fields in the world up for auction in 2009. But many U.S. oil companies chose not to participate. When weighed against a violent war, decrepit infrastructure, and general lack of political and economic stability, most major U.S. oil companies found the financial rewards weren't worth it, Alkadiri says.
The same may be true in Venezuela, says Fareed Mohamedi, managing director at SIA-Energy International, an oil and gas consultancy.
" Last time in Iraq, this time in Venezuela, [oil companies] are saying 'Show me whether you can create a stable level playing field that we can really do business in,'" Mohamedi says.
ExxonMobil played the long game in Iraq
Many U.S. big oil companies did not sign contracts in Iraq in 2009, but one U.S. oil giant did: ExxonMobil. " They had a theory of getting in on the ground floor," Van Heuvelen says.
In Venezuela, Chevron stayed when ExxonMobil and ConocoPhillips left. "They played the long game," Kepes says.
Chevron is currently in talks with the U.S. and Venezuela about boosting Venezuela's oil output. In an email to NPR, Chevron spokesperson Bill Turenne wrote, "Our focus remains on the safety of our people, and the integrity of our assets in strict compliance with all laws and regulations applicable to its business, as well as the sanctions frameworks provided for by the U.S. government."
Van Heuvelen says it will be interesting to see what happens with Chevron in Venezuela. In Iraq, ExxonMobil's long game "kind of didn't pay off," Van Heuvelen says. " Profit margins remained suppressed and it was pretty hard to do business there and so they walked away from the project."
ExxonMobil left Iraq in January 2024. ExxonMobil did not respond to requests for comment.
Alkadiri says the main American companies that reaped big rewards in post-invasion Iraq were oil services companies. Those companies, including U.S. oil services company Halliburton, provided equipment and technical support to the oil sector.
The former CEO of Halliburton was Vice President Dick Cheney. Halliburton's subsidiary, KBR, came under scrutiny for multi-billion dollar contracts in Iraq.
Kepes says smaller independent oil companies that can take on more risk than big ones may have success in Venezuela, but they will not be able to make a big boost in oil output on their own.
U.N. involved with Iraq's oil revenues
After toppling Saddam, the U.S. began controlling Iraqi oil and gas revenue in a system set up through a 2003 U.N. security council resolution. It was overseen by an independent auditor. The idea was that Iraq's oil money would go to a bank account in the Federal Reserve Bank of New York, which it still does to this day. Then a small portion of the oil money would pay off debts racked up during the Saddam regime—they were paid off four years ago— and the rest would pay for the reconstruction of Iraq.
Unlike with Iraqi oil, there is currently no independent monitoring of U.S.-facilitated sales of Venezuelan oil. The U.S. brokered a deal so that Venezuelan oil would be sold through Swiss oil trading firms, Vitol and Trafigura. The U.S. says the oil sold for $500 million. Venezuela says it's received $300 million. In the Senate hearing, Secretary Rubio said the remaining $200 million is in a bank account in Qatar.
Both Vitol and Trafigura have pled guilty to bribery and recently settled cases with the Department of Justice. Vitol did not respond to requests for comment. Trafigura directed NPR to statements on its website, including one that states that the past incidents do not reflect Trafigura's values and that they are investing in compliance.
As for Venezuela's oil, Trafigura directed NPR to a statement on their website that reads, "At the request of the US government, Trafigura and Vitol are providing logistical and marketing services to facilitate the sale of Venezuelan oil... Trafigura operates in full compliance with applicable sanctions."
Rubio said multiple times in the Senate hearing that the use of the oil traders was a "short-term mechanism." White House spokesperson Rogers wrote in an email, "President Trump always does what is in the best interest of the American people, such as brokering this historic energy deal with Venezuela."
Alkadiri says there's not enough oversight of Venezuelan oil revenues. That worries him in a way Iraqi oil revenues didn't. " In the immediate term," he asks, "what's there to protect the Venezuelans?"
A long road back for Iraqi oil production
Around the time of the invasion of Iraq, senior Bush administration officials announced that Iraqi oil production would rebound—and soon.
That didn't happen. After the 2003 invasion, Iraqi oil production plummeted and it took four years for the country to get back to pre-war levels. It wasn't until 2011 that the country surpassed 2.6 million barrels a day, the production highs of Saddam's regime after the Gulf War.
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Venezuela's oil sector is starting from a weak place, battered by years of sanctions, decreased investment, and the flight of oil professionals under Chávez's administration. Venezuela's oil sector produces a third less than it did in the 1970s, 1990s, and early 2000s.
Today, many parts of Venezuela are controlled by armed gangs known as "colectivos." Trump may want to boost Venezuelan oil production, but to do that, the country has to address security risks and a lack of institutional capacity, says Gerald Kepes, president of Competitive Energy Strategies, an energy consultancy.
"Until they do, most of this is sheer fantasy," Kepes says.
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