By Ziggy Ojiegbe

U.S. President Donald Trump said Venezuela would hand over between 30 million and 50 million barrels of oil to the United States, cargoes worth about $2.8 billion at current market prices. He said the oil would be sold, with proceeds used to benefit both countries.

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The announcement late Tuesday marks a major escalation in Washington’s effort to reassert control over Venezuela’s energy sector following the capture of President Nicolás Maduro over the weekend. It also sidelines rival powers including China, Russia and Iran, whose close ties with Venezuela have long been viewed by U.S. officials as a security concern.

“I am pleased to announce that the Interim Authorities in Venezuela will be turning over between 30 and 50 MILLION barrels of high-quality, sanctioned oil to the United States of America,” Trump wrote in a social media post.
“This oil will be sold at its market price, and 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.”

The move restores U.S. influence over Venezuelan oil exports and deals a blow to China, previously the country’s largest oil buyer and a key political ally. Beijing has relied heavily on discounted Venezuelan crude, a trade that has now largely stalled following the U.S. blockade imposed last month.

Venezuela currently has a backlog of unshipped crude piling up in storage tanks and aboard contracted vessels. State oil company Petróleos de Venezuela SA (PDVSA) is rapidly running out of storage capacity as the blockade drags on, according to maritime intelligence firm Kpler.

Chevron Corp. remains the only U.S. company still producing and exporting Venezuelan oil under a sanctions exemption. The company has booked at least 11 tankers to load crude from the government-controlled ports of José and Bajo Grande.

“Even at the high end, 30 to 50 million barrels sounds big politically, but it is small economically,” said Haris Khurshid, chief investment officer at Karobaar Capital LP. “That’s a one-off flow, not a structural supply shift.”

Trump said the oil would be transferred to storage vessels and shipped directly to unloading terminals in the United States. He added that Energy Secretary Chris Wright had been instructed to execute the plan immediately.

Venezuelan crude is well suited to refineries along the U.S. Gulf Coast, many of which were built to process heavy, sour oil. Refiners such as Phillips 66 and Valero Energy Corp. could benefit from the shipments. Shares in several U.S. refiners rose on Monday following news of Maduro’s capture.

Some of the oil may also be placed into commercial storage, potentially boosting U.S. stockpiles that are near five-year seasonal lows.

ABC News separately reported that the Trump administration has told Venezuela’s interim leader, Delcy Rodríguez, that her government must exclusively partner with the United States on oil production and give U.S. buyers priority access to heavy crude. The White House is also demanding that Venezuela sharply reduce economic ties with China, Russia, Iran and Cuba, according to people familiar with the discussions.

Before the blockade, China was the primary destination for Venezuela’s oil exports. That trade has now largely stopped, except for cargoes already en route to Asia, forcing Beijing to seek alternative supplies from countries such as Iraq and Canada.

U.S. efforts to cut off Venezuela’s oil exports have intensified in recent weeks. American forces have targeted tankers attempting to leave Venezuelan waters, including the Bella 1, which was pursued into the Atlantic. Russia has since deployed a submarine and other naval assets to escort the vessel, the Wall Street Journal reported.

The volumes cited by Trump would represent roughly 30 to 50 days of Venezuela’s oil production before the partial U.S. blockade, a level already far below historic output. U.S. oil benchmark West Texas Intermediate fell as much as 2.4% after Trump’s announcement and was trading near $56.40 a barrel.

Venezuela holds the world’s largest proven crude reserves, but years of underinvestment, mismanagement and sanctions have sharply reduced production. The country now supplies less than 1% of global oil output, and analysts say it would take years and billions of dollars in investment to revive production meaningfully.