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Donald Trump has said Venezuelan authorities will turn over 30mn to 50mn barrels of sanctioned crude to the US, in a sign his administration is escalating its push to control the South American country’s oil sector.
The US president said on Tuesday that the oil, worth up to $3bn, would be sold at market prices. “That money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States,” he wrote in a post on his Truth Social platform.
“It will be taken by storage ships, and brought directly to unloading docks in the United States,” Trump said. “I have asked Energy Secretary Chris Wright to execute this plan, immediately.”
The comments come as a flotilla of US oil tankers makes its way towards Venezuelan waters to begin loading the country’s oil, which has been stranded at ports as a result of Washington’s naval blockade.
Analysts have warned Venezuela’s production will “collapse” due to a shortage of storage unless Washington halts its blockade.
But Trump’s declaration that he would control up to 50mn barrels of Venezuelan oil — just less than 50 days of the country’s production — will intensify criticism that his administration is bullying the country to extract oil concessions.
“This is confiscatory, imperialistic and there is no justification for it,” said Jeffrey Sonnenfeld, a professor at Yale’s business school who has advised previous US administrations on sanctions policy. “There is also no need for this oil as we have a global oil glut.”
The Venezuelan government did not immediately respond to Trump’s statement.
In London trading on Wednesday, Brent crude, the global oil benchmark, was down 0.8 per cent at $60.20 a barrel while West Texas Intermediate, the US benchmark, dropped 1.3 per cent to $56.36 a barrel.
Chevron, the most prominent US company operating in Venezuela, had been in talks with the country’s state oil company PDVSA and US authorities about shipping some of the stranded crude to US refineries to relieve pressure on the nation’s creaking oil infrastructure, a person familiar with the matter said.
Almost a dozen tankers chartered by the US supermajor are sailing towards Venezuela or already at its ports. They could begin transporting some oil within days, according to commodity data group Kpler.
The US embargo, imposed in mid-December, has left oil transported from the Orinoco Belt, one of the world’s biggest crude fields, stranded in decrepit storage facilities that are at or near capacity.
If the country is forced to halt further production, it will face long delays in restarting, analysts warned.
“Venezuela has such a Herculean task before it to bring their oil sector back,” said Jason Bordoff, founding director of Columbia University’s Center on Global Energy Policy. “Having to shut production is going to make that much harder.”
Any shutdown would imperil Trump’s efforts to rapidly deliver the windfall to the US oil sector that he touted following the brazen raid over the weekend to depose strongman Nicolás Maduro.
Eimear Bonner, Chevron’s chief financial officer, and other senior US oil executives are expected to meet energy secretary Wright on the sidelines of an energy conference in Miami on Wednesday for talks about the White House’s strategy for Venezuela.
The White House did not immediately respond to a request for comment.
People familiar with the Venezuela energy sector have warned its oil production could fall by a third in the next four weeks to as low as 600,000 barrels a day if it is not possible to move oil out of storage.
Venezuela’s crude exports — much of which were until recently sent to China — have fallen more than 30 per cent since Trump imposed a “total and complete shutdown” of sanctioned tankers transporting oil from the country’s ports.
China’s foreign ministry on Wednesday said that Venezuela “enjoys full and permanent sovereignty over its natural resources and economic activities” and that US demands for the country to hand over its oil “violate international law, infringe upon Venezuela’s sovereignty, and harm the rights of the Venezuelan people”.
“The US’s flagrant military actions against Venezuela and its demand that Venezuela prioritise ‘America First’ in managing its oil resources are typical acts of bullying,” the ministry said.
Chevron has been able to continue exporting crude, including to US refineries, through special licences from Washington.
Schreiner Parker, head of emerging markets at consultancy Rystad Energy warned there could be “a short-term production collapse”, with offshore floating storage in tankers also at risk of filling up.
Additional reporting by Joe Daniels in Bogotá and Joe Leahy in Beijing
