Venezuela to Transfer Up to 50 Million Barrels of Oil to United States

TLDR

• President Trump announced Venezuela will transfer 30-50 million barrels of oil to the US, worth approximately $2.8 billion at current prices
• The oil will be sold at market price with proceeds controlled by Trump to benefit both Venezuela and the US
• Trump administration demands Venezuela exclusively partner with the US on oil production and reduce ties with China, Russia, Iran, and Cuba
• West Texas Intermediate oil fell 2.4% following the announcement, trading near $56 per barrel
• The transfer represents 30-50 days of Venezuelan oil production and comes after the capture of Nicolas Maduro over the weekend

President Donald Trump announced late Tuesday that Venezuela’s interim authorities will transfer between 30 and 50 million barrels of oil to the United States. The oil shipment carries an estimated value of $2.8 billion based on current market prices.

The announcement follows the capture of Venezuelan leader Nicolas Maduro by US forces over the weekend. Trump stated the oil would be sold at market price with proceeds controlled by him to benefit both countries.

West Texas Intermediate, the US oil benchmark, dropped as much as 2.4% after Trump’s announcement. The benchmark is currently trading close to $56 per barrel.

The volumes represent approximately 30 to 50 days of Venezuelan oil production before the US implemented a partial blockade of the country last month. Trump said the sanctioned oil would be transported by storage ships directly to US unloading docks.

Energy Secretary Chris Wright has been assigned to execute the plan immediately. Representatives from the US Energy Department and White House have not provided additional details about the transfer.

US Demands Exclusive Oil Partnership

ABC News reported the Trump administration told Venezuela’s interim leader Delcy Rodriguez that her government must exclusively partner with the US on oil production. The administration also directed Venezuela to favor the US when selling heavy crude.

The White House is demanding Venezuela reduce economic ties with China, Russia, Iran, and Cuba. This would mark a complete political realignment for Venezuela, which has depended heavily on these countries for economic and security support.

China was the main buyer of Venezuelan oil before the US blockade began. That trade has now largely stopped except for cargoes already in Asia.

Venezuela has the world’s largest proven crude reserves. However, production has dropped sharply due to decades of neglect and the departure of many foreign oil companies.

The country now accounts for less than 1% of global oil supply. Analysts estimate it will take years and billions of dollars to revive output levels.

Christopher Beddor, deputy China research director at Gavekal Dragonomics, said the Chinese government is likely preparing for a scenario where all Venezuelan oil shipments are halted. He noted the Trump administration’s actions will have far-reaching implications for China’s import reliance on natural resources from Latin American countries.

Chevron Corp remains the only American company producing and exporting oil from Venezuela under an exemption from US sanctions. The company has booked at least 11 ships to sail to government-controlled ports of Jose and Bajo Grande.

Venezuelan oil is particularly suitable for refineries along the US Gulf Coast. These refineries were built to process heavy-sour crudes and are operated by companies including Phillips 66 and Valero Energy Corp.

Haris Khurshid, chief investment officer at Karobaar Capital LP, called the shipment politically large but economically small. He noted it represents a one-off flow rather than a structural supply shift.

Trump is set to meet with energy executives at the White House within the next week to discuss rebuilding Venezuela’s oil industry. Trafigura Group and other traders will hold talks with the US about resuming Venezuelan oil purchases.

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