Trump Announces Venezuela Oil Transfer of 50 Million Barrels to US

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

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President Donald Trump announced Tuesday that Venezuela will transfer between 30 and 50 million barrels of oil to the United States. The Venezuelan 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.

Oil Prices Drop After Trump Venezuela Announcement

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

Crude Oil Feb 26 (CL=F)

The volumes represent approximately 30 to 50 days of Venezuelan oil production before the US implemented a partial blockade 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 Venezuela oil transfer plan immediately. Representatives from the US Energy Department and White House have not provided additional details.

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 oil.

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 support.

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

Venezuela has the world’s largest proven crude oil reserves. However, Venezuelan oil 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 Venezuelan oil 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 impact China’s import reliance on natural resources from Latin American countries.

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

Venezuelan crude 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 oil 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 oil traders will hold talks with the US about resuming Venezuelan oil purchases.

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