The emerging US-Venezuela oil partnership could offer a model for how Iran’s vast but underinvested energy industry might be revived under a future government able to restore ties with the West, while also reshaping oil flows in Europe.
The significance of closer US-Venezuela energy cooperation lies not only in the scale of Venezuela’s oil reserves, but also in the complementary qualities of the two countries’ crude — and in what international capital, technology and access to Western markets could mean for an oil industry weakened by years of isolation.
Most US shale crude is light and sweet, while Venezuela’s Merey 16 is an extra-heavy, high-sulfur grade. A technical estimate suggests that a blend of roughly 60% light US crude and 40% Venezuelan Merey 16 could produce a crude with an API gravity of around 31 to 32 degrees and sulfur content of roughly 1.5%, depending on the specific US grade used.
Those characteristics are close to Russia’s Urals, a medium-sour crude with an API gravity of around 31 degrees and sulfur content of about 1.4%. Before Russia’s full-scale invasion of Ukraine, Urals was one of the main feedstocks for European refineries.
The United States could therefore potentially offer European refiners three options: its own light crude, Venezuelan heavy crude for plants capable of processing it, and tailored blends suited to refineries that previously relied heavily on Russian medium-sour crude. Complex US Gulf Coast refineries could also process Venezuela’s heavy oil and export diesel, jet fuel and other refined products needed by Europe.
The United States is already the European Union’s largest supplier of petroleum oil, accounting for 17.8% of EU petroleum-oil imports in the first quarter of 2026.
It is still too early, however, to speak of US-Venezuelan dominance of the European market. Venezuela currently produces around 1.25 million barrels per day, while rebuilding its electricity network, pipelines, processing facilities, refineries and ports will require tens of billions of dollars in investment and several years.
In the short term, the agreement is therefore more significant as a political and psychological signal to the market. In the medium term, if it results in substantially higher Venezuelan production, it could increase Atlantic Basin oil supplies, further reduce Europe’s dependence on Russian and some Middle Eastern crude, redirect some Venezuelan oil from China toward Western markets, and put additional pressure on OPEC+’s ability to manage the market.
A potential model for Iran
For Iranians, however, Venezuela may carry a broader message. Like Venezuela, Iran possesses enormous oil and gas reserves, but its energy industry faces deep problems after years of sanctions, insufficient investment, aging infrastructure, limited access to advanced technology, declining pressure in some mature fields and the constraints under which many projects were developed during the sanctions era.
If the Islamic Republic were to fall, followed by a stable political transition and the establishment of a government capable of maintaining normal and constructive relations with the United States, Europe and the global economy, Iran’s oil and gas industry could become one of the main engines of the country’s economic reconstruction.
Under such conditions, the entry of major international companies, including US oil producers and oilfield-services firms, could provide the capital, technology and managerial expertise needed to rehabilitate wells, pipelines, processing facilities, refineries, ports and Iran’s export infrastructure.
American companies have extensive experience in advanced drilling, reservoir management, enhanced oil recovery, rehabilitating low-output wells, processing heavy and sour crude and designing crude blends tailored to refinery requirements. The same basic logic that makes light US crude a useful complement to Venezuela’s extra-heavy oil could also be applied to the marketing and optimization of some Iranian crude grades.
Iran, of course, has its own broad range of light, medium and heavy crudes as well as condensates. The main opportunity would therefore not simply be to import US light crude for blending, but to use Western technology, capital and commercial networks to develop competitive export blends and regain access to global markets.
The return of established American and European companies could also create an opportunity for an independent assessment of projects carried out during the sanctions era, including those undertaken by domestic and Chinese contractors, and for facilities and equipment to be upgraded or replaced where necessary.
Such a transformation could increase Iran’s production capacity, reduce energy waste and the flaring of associated gas, improve environmental standards and create substantial direct and indirect employment.
None of this, however, would happen automatically or immediately after a change of government. The lifting of sanctions, legal protection for investors, transparent oil contracts, efforts to combat corruption, an independent judiciary and political stability would all be prerequisites for attracting investment on the required scale.
Oil revenues would also need to be managed through transparent mechanisms and directed toward rebuilding the country, its infrastructure, education, healthcare and public welfare, avoiding a repeat of Iran’s historic overdependence on oil.
The US-Venezuela partnership therefore matters to Iran for more than the possibility that a blend of light American and extra-heavy Venezuelan crude could emerge as a serious competitor to Russian Urals in parts of the European market.
The more important lesson is that vast hydrocarbon reserves can regain economic value when accompanied by investment, technology and access to international markets. Iran’s oil and gas resources could still underpin a new period of economic growth if a stable and transparent government with constructive international relations emerges after the Islamic Republic.
Cooperation with American and other major international companies could then help rebuild Iran’s aging energy industry and restore the country as a significant and reliable player in the global energy market.
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