Following President Donald Trump’s statement that the US would take control of Venezuela’s massive oil reserves and recruit American companies to invest billions of dollars to refurbish the country’s gutted oil industry, trade measures continue to threaten it oil.
According to the US Energy Information Administration (EIA) that trove of crude oil will play a central role in the country’s future.
Recent reports indicate that Venezuela’s oil sector is still under severe strain. Years of underinvestment, corruption, mismanagement, and international sanctions have reduced oil production far below its potential.
While there have been attempts to revive output through limited foreign partnerships and temporary easing of some restrictions, uncertainty remains high. New geopolitical tensions and tougher trade measures—especially from the United States—continue to threaten Venezuela’s fragile oil exports.
These pressures worsen an already dire situation. Inflation remains high, public services are weak, and millions of Venezuelans have left the country in search of better opportunities.
Those who remain struggle with shortages of food, medicine, electricity, and clean water. Venezuela’s crisis shows how quickly an oil-rich country can collapse when governance fails and economic policy is poorly managed.
Some years back, Venezuela was a clear warning to countries that rely too heavily on oil, and Nigeria should pay close attention. Although Venezuela is in Latin America and Nigeria is in Africa, both countries share striking similarities. They are petrostates—countries whose economies depend largely on oil.
In Venezuela’s case, oil accounts for almost all government revenue. Nigeria’s dependence is not as extreme, but oil still dominates foreign exchange earnings and public finance. This heavy reliance has created serious economic risks for both nations.
Is oil wealth a curse or blessing?
Recall, Venezuela is sitting on a massive 303 billion barrels worth of crude, about a fifth of the world’s global reserves, Venezuela has the world’s largest proven oil reserves, even more than Saudi Arabia. Decades ago, it was one of the richest countries in Latin America.
But instead of using oil wealth to build strong institutions and diversify its economy, the country became dependent on oil exports. Agriculture, manufacturing, and other productive sectors were neglected. Venezuela imported almost everything, including food, using oil money to pay the bills.
Nigeria has followed a similar path. Oil money has crowded out other sectors, leaving the economy vulnerable to oil price shocks. This situation reflects what economists call the Dutch Disease, where heavy reliance on natural resources weakens other parts of the economy.
When oil prices fall, government revenue collapses, foreign reserves shrink, currencies weaken, and inflation rises. Both Venezuela and Nigeria have experienced this cycle.
Nigeria is not immune
Nigeria should not assume that such can never happen as Falling oil prices, declining production, currency depreciation, rising debt, and persistent inflation already show warning signs.
Like Venezuela, Nigeria has also turned to international lenders in difficult times, often under strict conditions that affect ordinary citizens through subsidy removals, higher prices, and reduced social spending.
There is also a geopolitical lesson. Venezuela’s experience shows how vulnerable a mono-product economy can be to external pressure such as sanctions, tariffs, or diplomatic conflicts. In today’s unpredictable global environment, Nigeria must be cautious in its international relations, especially with major powers, and avoid policies that could expose the economy to severe external shock.
Nigeria therefore must learn how to diversify the economy urgently since Oil and gas cannot remain Nigeria’s mainstay. The country must invest seriously in agriculture, manufacturing, technology, and small and medium-sized enterprises (SMEs) as these are the only sustainable ways to create jobs, grow exports, stabilize revenue, save and invest in oil revenue wisely and reduce dependence of states on oil allocations.
Learning from Venezuela’s mistakes while following better examples like Norway could make the difference between long-term stability and avoidable economic disaster.
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