Venezuela Update: Recoveries Climbing on Oil Shock?

• We update our comments on the situation in Venezuela and potential debt recoveries
• Higher oil prices, which have risen following the war in Iran, should be positive for debt recovery values in Venezuela
• The U.S. government continues the process of normalizing relations by issuing OFAC licenses, allowing the embassy to reopen, and downgrading the threat level for travel to Venezuela
• In March 2026, U.S. Department of State representative Michael Kozak, who is the Senior Official in the Bureau of Western Hemisphere Affairs, sent a letter notifying the U.S. justice system and federal court in New York that it has formally and legally recognized Delcy Rodriguez as the sole head of state for Venezuela
• We caution that the situation remains fluid and the country is still in default, with a formal resolution likely still many months away

We have continued to follow the situation in Venezuela since our last comment in January (see: Venezuela and PDVSA: What Does Debt Restructuring Look Like? | Of Interest by Amerant). In that report, we outlined the comprehensive steps for a formal restructuring process for Venezuela and PDVSA. We concluded by noting that the process was likely to take some length of time given the amount of debt, the various classes of creditors, and the challenges in dealing with both bilateral loans and corporate claimants (“ICSID” claims from the International Centre for Settlement of Investment Disputes).

In this report, we update on recent developments in Venezuela and recent trading prices for Venezuelan sovereign and PDVSA debt. We note that bonds from Venezuela and PDVSA continue to rally, with some recently trading near 50 cents, up from single-digit levels just a year ago.

In our view, there is no clarity on the ultimate recovery level for the defaulted bonds. Positively, however, the recent higher oil price does imply the potential for higher recovery rates, as we believe the restructuring solution will likely include warrants on the country’s oil production revenues and/or GDP growth. Given Venezuela’s large proven oil reserves, all interests are aligned with increasing oil production quickly as the best path forward for both the country and the legacy creditors.  

U.S. State Department Issues Statement on Venezuela

Since January, there have been several steps from the U.S. government towards normalizing relations with Venezuela. On March 5, 2026, the U.S. State Department issued a statement, which read in its entirety:

The United States and Venezuela’s interim authorities have agreed to re-establish diplomatic and consular relations. This step will facilitate our joint efforts to promote stability, support economic recovery, and advance political reconciliation in Venezuela. 

Our engagement is focused on helping the Venezuelan people move forward through a phased process that creates the conditions for a peaceful transition to a democratically elected government. 

The United States remains committed to supporting the Venezuelan people and working with partners across the region to advance stability and prosperity. (Source: https://www.state.gov/releases/office-of-the-spokesperson/2026/03/a-statement-on-u-s-venezuela-relations/)

We note that although the U.S. statement alludes to creating the “conditions” for a democratically elected government, it does not commit to any timeline for this goal or lay out any specific benchmarks of how this will be achieved.

No Election Timeline, For Now

At a recent conference, we attended a panel with various parties commenting on the situation in Venezuela. The consensus view from the panelists was that the U.S. was likely to tolerate a period of “managed authoritarianism” in the country, essentially empowering the remainder of the Maduro regime for now.

There was a view that elections in Venezuela were unlikely to take place in 2026 and that it was in the interest of the current leadership in the country to delay progress towards holding an election. Given that the U.S. is most focused on the energy industry, we sense that the U.S. appears content to work with Delcy Rodriguez for the foreseeable future. Some panelists felt that the Venezuelan government would try to stay in power until after the U.S. mid-term elections, after which time the Trump administration’s priorities could shift.

So, despite hopes from Machado that there could be an election in short order, we sense that the U.S. is more focused on stability than fairness. This could mean that Venezuela must first demonstrate progress on its oil production and economic stability before elections are on the horizon. 

Oil Industry Takes Priority

Even though the timeline for democratic elections is unclear, we are relatively more constructive on the prospects for a quicker timeline for restoring oil production. We note that with the recent increase in oil prices, the marginal production by Venezuela can be critical to both the country’s debt recovery and easing the global energy crunch. All sides are therefore aligned and incentivized to get oil flowing again as soon as possible.

There was consensus on the conference panel that the country can be rebuilt and that improvements in oil production are key to a broader economic recovery. As a result, the top priority for those on the ground in Venezuela is to restore the country’s energy production capacity, which can lead to broadly positive outcomes.

According to a report by Bloomberg News, tanker loadings at the Jose port terminal are expected to rise to over 800,000 barrels per day in March, which would be the highest volume from the port since 2019. Similarly, a recent research report from Morgan Stanley stated their view that oil output may recover more quickly than previously forecast. We note that Venezuela’s production remains below 1 million barrels per day, compared to over 3 million barrels per day in years past.

According to the same Morgan Stanley analysis, the firm outlines potential scenarios called a “moderate recovery” or a “fast recovery” and potential recovery rates of 50% to 70% (haircuts of 50% and 30%, respectively) for each scenario. We caution that these estimates are based on multiple assumptions, including production levels, oil prices, and variables in the restructuring process itself. We do not maintain a formal recovery estimate for Venezuela or PDVSA bonds.

New Citgo Leadership Named

We note that as of last week, Venezuela appointed Asdrúbal Chávez, a relative of former President Hugo Chávez, as head of PDV Holding, Citgo’s parent company.

We note that Citgo remains party to lengthy litigation, as parties have pursued recoveries on defaulted debt by seizing Citgo. Although debtholders, led by Elliot Investment Management, were awarded a large settlement by U.S. courts, the settlement has not yet been paid because it requires approval from the U.S. Treasury Department. According to press reports, the ultimate resolution of Citgo remains unclear, as the Venezuelan government is believed to want the court-ordered Citgo settlement rejected and the asset returned to Venezuelan ownership.

Many Crucial Questions Remain Unanswered

Even with these positive first steps, we note that many key questions remain unanswered.

For example, important issues that remain unresolved include: Will the current government in Venezuela be actively engaged in restructuring? Will sovereign and PDVSA debt be treated the same in the negotiations? Will commercial creditors be paid first? Will the IMF and China be involved in the restructuring? How quickly can these claims be resolved? Will there be assurances that claims will be honored if there is a future change in the government? Will the country attempt to start coupon payments first before a final settlement? Will the restructuring include oil production warrants and/or macro-linked bonds/GDP-linkers?

At Amerant, we will continue to follow developments in Venezuela as we know the country remains of interest to many of our clients. We welcome the first steps of normalization in U.S.-Venezuela relations. Still, we note that the country has been underinvested for many years, and many issues remain to be resolved before it is clearly on a sustained path of recovery.

Definitions, sources, and disclaimers

This content is being published by Amerant Investments, Inc (Amerant Investments), a dually registered broker-dealer and investment adviser registered with the Securities and Exchange Commission (SEC) and member of FINRA/SIPC. Registration does not imply a certain level of skill, endorsement, or approval. Amerant Investments is an affiliate of Amerant Bank.

Definitions:

• Gross Domestic Product (GDP): A comprehensive measure of U.S. economic activity. GDP is the value of the goods and services produced in the United States. The growth rate of GDP is the most popular indicator of the nation’s overall economic health. Source: Bureau of Economic Analysis (BEA).
• GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter. There are no subjective adjustments made to GDPNow—the estimate is based solely on the mathematical results of the model. In particular, it does not capture the impact of COVID-19 and social mobility beyond their impact on GDP source data and relevant economic reports that have already been released. It does not anticipate their impact on forthcoming economic reports beyond the standard internal dynamics of the model.
• The Current Employment Statistics (CES) program produces detailed industry estimates of nonfarm employment, hours, and earnings of workers on payrolls. CES National Estimates produces data for the nation, and CES State and Metro Area produces estimates for all 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, and about 450 metropolitan areas and divisions. Each month, CES surveys approximately 142,000 businesses and government agencies, representing approximately 689,000 individual worksites. Source: Bureau of Labor Statistics (BLS).
• Initial Claims: An initial claim is a claim filed by an unemployed individual after a separation from an employer. The claimant requests a determination of basic eligibility for the UI program. When an initial claim is filed with a state, certain programmatic activities take place and these result in activity counts including the count of initial claims. The count of U.S. initial claims for unemployment insurance is a leading economic indicator because it is an indication of emerging labor market conditions in the country. However, these are weekly administrative data which are difficult to seasonally adjust, making the series subject to some volatility. Source: US Department of Labor (DOL).
• The Consumer Price Index (CPI): Is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available. Source: Bureau of Labor Statistics (BLS).
• The national unemployment rate: Perhaps the most widely known labor market indicator, this statistic reflects the number of unemployed people as a percentage of the labor force. Source: Bureau of Labor Statistics (BLS).
• The number of people in the labor force. This measure is the sum of the employed and the unemployed. In other words, the labor force level is the number of people who are either working or actively seeking work.Source: Bureau of Labor Statistics (BLS).
• Advance Monthly Sales for Retail and Food Services: Estimated monthly sales for retail and food services, adjusted and unadjusted for seasonal variations. Source: United States Census Bureau.
• Federal Open Market Committee (FOMC): Responsible for implementing Open market Operations (OMOs)–the purchase and sale of securities in the open market by a central bank—which are a key tool used by the US Federal Reserve in the implementation of monetary policy. Source: Federal Reserve.
• The Federal Funds Rate: Is the interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight. When a depository institution has surplus balances in its reserve account, it lends to other banks in need of larger balances. In simpler terms, a bank with excess cash, which is often referred to as liquidity, will lend to another bank that needs to quickly raise liquidity. Source: Federal Reserve Bank of St. Louis.
• The “core” PCE price index: Is defined as personal consumption expenditures (PCE) prices excluding food and energy prices. The core PCE price index measures the prices paid by consumers for goods and services without the volatility caused by movements in food and energy prices to reveal underlying inflation trends. Source: Bureau of Economic Analysis (BEA).

Sources: U.S. Bureau of Economic Analysis (BEA), Bureau of Labor Statistics (BLS), U.S. Department of Labor (DOL), Federal Reserve, Federal Reserve Economic Database (FRED), Federal Reserve Bank of Atlanta, U.S. Census Bureau, Department of Housing and Human Development (HUD), U.S. Department of Agriculture, U.S. Energy Information Administration (EIA), U..S Department of the Treasury, Office of the United States Trade Representative (USTR), U.S. Department of Commerce, data.gov, investor.gov, usa.gov, congress.gov, whitehouse.gov, U.S. Securities and Exchange Commission (SEC), Morningstar, The International Monetary Funds (IMF), The World Bank (WB), European Central bank (ECB), Bank of Japan (BOJ), European Parliament, Eurostats, Organization for Economic Co-operation and Development (OECD), National Bureau of Statistics of the People’s Republic of China, Organization of the Petroleum Exporting Countries (OPEC), World health organization (WHO).

Financial Markets – Recent Prices and Yields, and Weekly, Monthly, and YTD (Table): Bloomberg, Weekly Market Data is in USD and refers to the following indices: Macro & Market Indicators: Volatility (VIX); Oil (WTI); Dollar Index (DXA); Inflation (CPI YoY); Fixed Income: All U.S. Bonds (Bloomberg Aggregate Index); Investment Grade Corporates (Bloomberg US Corporate Index); US High Yield (Bloomberg High Yield Index), Treasuries (ICE BofA Treasury Indices); Equities: U.S. Industrials (Dow Jones Industrial Average); U.S. Large Caps (S&P 500); U.S Tech Equities (Nasdaq Composite); European (MSCI Euope), Asia Pacific (MSCI AP), and Latin America Equities (MSCI LA); Sectors (S&P 500 GICS Sectors) Source: Bloomberg. Fed Funds Rate probabilities, Source: CME FedWatch Tool.  

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