In a significant development concerning global oil markets and US-Venezuela relations, former President Donald Trump declared that Venezuela's interim government will hand over a massive stockpile of crude oil to the United States. The announcement, made via his Truth Social platform, outlines a plan where the US government will control the proceeds from the sale.
The Announcement and Immediate Plan
On Tuesday, Donald Trump stated that the Interim Authorities in Venezuela will transfer between 30 million and 50 million barrels of what he termed "High Quality, Sanctioned Oil" to the United States. He emphasized that this crude would be sold at prevailing market prices. Crucially, Trump asserted that the resulting funds would be under his control, as President, to ensure they benefit both the Venezuelan and American people.
Trump revealed he has directed Energy Secretary Chris Wright to execute this plan immediately. The oil is slated to be transported using storage ships directly to unloading docks within the United States. A senior US administration official, speaking anonymously to CNN, provided further clarity, confirming the oil has already been produced and is stored in barrels. Most of this stockpile is reportedly on vessels that will now be rerouted to refining facilities on the US Gulf Coast.
Market Impact and Volume Context
The oil markets showed a measured response to the news. Following the announcement, US crude prices dipped by approximately $1 per barrel, a drop of just under 2%, settling around $56. Analysts suggest the transfer may have a limited direct effect on consumer fuel prices. For perspective, the United States consumes over 20 million barrels of oil daily, so this volume, while large, represents a supply of roughly 1.5 to 2.5 days of national consumption.
However, the financial implications are substantial. With Venezuelan oil trading near $55 per barrel, the total potential revenue from selling up to 50 million barrels could range from $1.65 billion to $2.75 billion. This move is notably smaller in scale compared to a 2022 action by the Biden administration, which released about 180 million barrels from the US Strategic Petroleum Reserve. A Treasury analysis found that earlier release reduced gasoline prices by 13 to 31 cents per gallon over a four-month period.
Origins and Logistics of the Venezuelan Crude
Venezuela has amassed significant crude inventories since the United States imposed a strict oil embargo on the country late last year. The oil earmarked for transfer is expected to be sourced from a combination of onshore storage facilities and seized tankers that were previously carrying Venezuelan crude.
Industry experts note that Venezuela possesses roughly 48 million barrels of onshore storage capacity, which was recently near full capacity. Additionally, seized tankers are estimated to be holding between 15 million and 22 million barrels. The senior administration official indicated the handover process would likely be swift, as Venezuela's heavy crude grade is not suitable for long-term storage. The exact timeline for the complete transfer, however, remains unspecified.
This development marks a major shift in the disposition of Venezuela's oil reserves and introduces a new dynamic in the geopolitical landscape of energy trade, with the US government poised to manage significant funds derived from the sale of another nation's natural resources.
