According to President Donald Trump, Venezuela would give up up to 50 million barrels of oil to the United States, which would be worth around $2.8 billion at the current market price. He also said that the revenues from the sale of the cargoes would benefit both nations.
Trump Announces Venezuelan Oil Transfer
The declaration, which was made late on Tuesday and had few specifics, was a major step forward for the US administration in its efforts to increase its economic clout in Venezuela and beyond after the overnight seizure of leader Nicolas Maduro. It is also a setback for China, a key ally and formerly the nation’s biggest oil consumer.
Trump’s Social Media Statement
Trump posted on social media, saying, “I am delighted to announce that the Interim Authorities in Venezuela will be handing over between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil to the United States of America.”
“This oil will be sold at its market price, and as President of the United States of America, I will manage that money to make sure it is utilized to benefit the people of the United States and Venezuela,” he said.
🛢️ Venezuela–US Oil Deal Snapshot
- Oil Volume: 30–50 million barrels
- Estimated Value: Around $2.8 billion
- Seller: Venezuela Interim Authorities
- Buyer: United States of America
- Oil Type: High quality, sanctioned oil
- Usage: Revenue to benefit both nations
Market Reaction and Output Context
The amounts mentioned by Trump would amount to around 30 to 50 days’ worth of Venezuelan oil output prior to the US’s partial embargo of the nation—much lower than previous levels. Following Trump’s remarks, the US oil benchmark, West Texas Intermediate, dropped as much as 2.4% and is now trading at about $56 per barrel.
Requests for more information were not answered by the White House or the US Energy Department. Requests for comment were also not answered by Venezuela’s ministries of communication and oil.
Venezuela’s Oil Production Challenges
Despite having the greatest known crude reserves in the world, Venezuela’s output has drastically decreased as a result of decades of mismanagement and the departure of several international oil businesses. Less than 1% of the world’s supply now comes from this nation. According to analysts, any production revival would need years and billions of dollars in investment.
According to Christopher Beddor, deputy China research director at Gavekal Dragonomics, “the Chinese government is probably definitely planning for a scenario in which all its Venezuelan oil imports are terminated.” The vigorous reassertion of the Monroe Doctrine by the Trump administration will have significant ramifications for China. It will likely compel China to reconsider its dependence on imports of natural resources from several other Latin American nations.
🌍 Geopolitical & Supply Impact
- China Impact: Possible termination of Venezuelan oil imports
- US Policy: Reassertion of Monroe Doctrine
- Supply Nature: One-time flow, not structural change
- Investment Need: Billions required for production revival
- Oil Storage: Venezuela facing capacity constraints
Logistics, Chevron, and US Refiners
Trump did not say where the oil came from. Since the US embargo started last month, Venezuela has accumulated a backlog of unshipped petroleum in storage tanks and on contracted tankers. According to maritime intelligence service Kpler, the state-owned oil giant Petroleos de Venezuela SA has been fast running out of room as the embargo continues.
The only American business that continues to produce and export barrels from Venezuela while being free from US sanctions is Chevron Corp. It has reserved a fleet of at least eleven ships to go to Jose and Bajo Grande, ports under government control. Requests for comment were not immediately answered by a Chevron official.
According to Haris Khurshid, chief investment officer of Karobaar Capital LP, “even at the high end, 30 to 50 million barrels seems large politically, but it is modest commercially.” “That is not a structural supply change; it is a one-time flow.”
The sanctioned oil will be “taken by storage ships, and carried straight to unloading ports in the United States,” according to Trump’s tweet. Chris Wright, the Energy Secretary, said that he had been given the responsibility of carrying out the plan “immediately.”
Refineries along the US Gulf Coast, many of which were constructed to treat such heavy-sour crudes, are especially well-suited to Venezuelan oil. These cargoes may be advantageous to these factories operated by companies like Valero Energy Corp. and Phillips 66. Following Maduro’s arrest, their share prices surged on Monday.
Additionally, some of the oil could end up in commercial storage tanks, which might help inventories that are now on the verge of five-year seasonal lows.
The Trump administration has instructed Venezuela’s interim leader, Delcy Rodriguez, that her government must only work with the US on oil production and give preference to the US when exporting heavy crude, according to a separate ABC story on Tuesday.
According to ABC, which cited three anonymous persons with knowledge of the matter, the White House is also pressuring Venezuela to cut its economic connections to China, Russia, Iran, and Cuba. For Venezuela, which has recently depended significantly on the foursome for security and economic stability, doing so would constitute a complete political realignment.
China was the primary recipient of the South American country’s substantially discounted oil prior to the US embargo and Maduro’s imprisonment. With the exception of shipments already in Asia, that commerce has now almost ceased, and Beijing may now need to look into other possibilities like Canadian or Iraqi oil.
For weeks, US troops have been targeting tankers as part of Washington’s attempt to cut off that lifeline for the Venezuelan regime. They had chased the empty oil ship Bella 1 into the Atlantic. According to the Wall Street Journal, Russia has now sent a submarine and other naval resources to give the ship with an escort.
