Trump Says Venezuela Will Hand Over Up To 50 Million Barrels Of Oil To The U.S.

US President Donald Trump has said that Venezuela will hand over between 30 million and 50 million barrels of oil to the United States. The oil will be sold at market prices, and the US government will control the money raised from the sales.

Trump made the announcement on Tuesday night in a post on Truth Social. He said Venezuela’s interim authorities would transfer what he described as sanctioned oil. He also said the funds from the sale would be used to benefit both Venezuela and the United States.

According to Trump, US Energy Secretary Chris Wright has been instructed to carry out the plan immediately. He said the oil would be moved using storage ships and brought directly to unloading terminals in the United States.

A senior US administration official, speaking anonymously to CNN, said the oil has already been produced and placed into barrels. The official added that most of the oil is currently on ships and will be sent to US Gulf Coast facilities for refining.

The announcement follows major political developments in Venezuela. Over the weekend, Venezuelan President Nicolas Maduro was removed from power and taken out of the country by US forces.

Trump later said the United States would oversee the sale of the oil to make sure the money is used as intended.

Although the volume of oil involved is large, its impact on the market is expected to be limited. The United States has consumed just over 20 million barrels of oil per day on average over the past month, meaning the transfer equals only a few days of US oil demand.

Past experience suggests the effect on fuel prices may be small. In 2022, former US President Joe Biden released about 180 million barrels of oil from the US Strategic Petroleum Reserve.

A US Treasury Department analysis later found that this reduced petrol prices by between 13 and 31 cents per gallon over four months. After Trump’s announcement, US oil prices fell by about $1 per barrel, or just under 2 per cent, to around $56.

At current prices, selling up to 50 million barrels of oil could generate large revenues. Venezuelan crude is trading at about $55 per barrel, which means the sale could raise between $1.65 billion and $2.75 billion if sold at market value.

Venezuela has built up large oil stockpiles since the United States imposed an oil embargo late last year. However, handing over such a large amount of oil could significantly reduce the country’s reserves.

Industry sources believe the oil will come from both onshore storage facilities and seized tankers. Phil Flynn, senior market analyst at Price Futures Group, said Venezuela has around 48 million barrels of storage capacity and was almost full.

Industry estimates suggest the seized tankers were carrying between 15 million and 22 million barrels of oil.

References: CNN, Reuters

Source: Maritime Shipping News