Venezuela's interim government would hand over between 30 million and 50 million barrels of "sanctioned oil" to the United States, U.S. President Donald Trump said on Tuesday, describing it as a move benefiting both nations.
In a post on his Truth Social platform, Trump said the oil would be sold at market prices and that the proceeds would be controlled by him as president to ensure they were used "to benefit the people of Venezuela and the U.S."
"I have asked Energy Secretary Chris Wright to execute this plan immediately. It will be taken by storage ships and brought directly to unloading docks in the U.S.," he added.
The U.S. had attacked targets in Venezuela on Saturday, seizing its President Nicolas Maduro over alleged drug offences and removing him from the country. After the operation, Trump said that the U.S. would temporarily "run" Venezuela.
The U.S. president had highlighted the economic potential of the country's oil industry, saying that major U.S. oil companies would invest billions to repair infrastructure and develop production. Trump has also said he wants interim President Delcy Rodriguez to give the U.S. and private companies "total access" to Venezuela's oil industry.
Several Democrats have accused Trump of targeting Venezuela solely for its oil reserves, calling Maduro's arrest merely a pretext.
Rodriguez has rejected the U.S. government's claim to control the South American country, saying: "The Venezuelan government rules our country, and no one else does. There is no external agent governing Venezuela."
It remained unclear how her asserted independence would align with Trump's announcement on the transfer of oil. Still, the announcement appears to be a strong sign that the Rodriguez-led government is responding to Trump's demand that they open up to U.S. oil companies or risk more military intervention.
Venezuela has millions of barrels of oil loaded on tankers and in storage tanks that it has been unable to ship due to a blockade on exports imposed by Trump since mid-December.
The blockade was part of rising U.S. pressure on the government of Maduro that culminated in U.S. forces capturing him this weekend.
It was not immediately clear over what period of time the amount of crude oil mentioned by Trump is to be provided. The volume is roughly equivalent to Venezuela's total oil industry output over one to two months. Oil sales are the government's main source of revenue and foreign exchange.
Venezuela's new leadership in Caracas did not immediately comment on Trump's announcement.
Based on current prices and using U.S. benchmark crude WTI for February delivery at $58.65 per barrel as of Tuesday afternoon, the proceeds could be worth up to $2.9 billion. The actual price for Venezuelan oil could be below the global market rate. A barrel of oil contains 159 liters.
Venezuela holds an estimated 303 billion barrels of oil, the largest reserves in the world. Despite this, production is currently low at around 1 million barrels per day (bpd), weighed down by sanctions, alleged mismanagement at the state oil company PDVSA and corruption.
The loss of revenue would hit the South American country hard, while the expected gains for the U.S. would be minimal. The oil volume is also relatively small for the U.S., which produces about 14 million barrels per day.
Supplying the trapped crude to the U.S. could initially require reallocating cargoes originally bound for China, two sources had told Reuters earlier on Tuesday.
The Asian country has been Venezuela's top buyer in the last decade and especially since the U.S. imposed sanctions on companies involved in oil trade with Venezuela in 2020.
"Trump wants this to happen early so he can say it is a big win," an oil industry source said.
U.S. crude prices fell more than 1.5% after Trump's announcement, with the agreement expected to increase the volume of Venezuelan oil exported to the U.S.
That flow of oil is currently controlled entirely by Chevron, PDVSA's main joint venture partner, under a U.S. authorization.
Chevron, which has been exporting between 100,000 and 150,000 barrels per day of Venezuelan oil to the U.S., is the only company that has been loading and shipping crude without interruption from the South American country in recent weeks under the blockade.
It was not immediately clear if Venezuela would have any access to proceeds from the supply. Sanctions mean PDVSA is excluded from the global financial system, its bank accounts are frozen and it is blocked from executing transactions in U.S. dollars.
Venezuela has been selling its flagship crude grade, Merey, at around $22 per barrel below Brent for delivery at Venezuelan ports, giving a value for the deal at up to $1.9 billion.
Rodriguez, sworn in as interim president on Monday, is herself under U.S. sanctions imposed in 2018 for undermining democracy.
Venezuelan and U.S. officials this week discussed possible sales mechanisms, including auctions to allow interested U.S. buyers to bid for cargoes and issuing U.S. licenses to PDVSA's business partners that could lead to supply contracts, two sources told Reuters.
Those licenses have in the past allowed PDVSA's joint venture partners and customers, including Chevron, India's Reliance, China National Petroleum Corporation (CNPC) and European Eni and Repsol, to have access to Venezuelan oil to refine or to resell to third parties.
This week, some of those companies have begun making preparations for receiving Venezuelan cargoes again, two separate sources said.
The U.S. and Venezuela have also discussed whether Venezuelan oil can be used in the U.S. Strategic Petroleum Reserve in the future, one of the sources said. Trump did not refer to this possibility.
U.S. Interior Secretary Doug Burgum said on Tuesday that an increased flow of Venezuelan heavy oil to the U.S. Gulf would be "great news" for job security, future gasoline prices in the U.S. and for Venezuela.
"Venezuela has an opportunity now to actually have capital come in and rebuild their economy and take advantage," he told Fox News, when asked about talks between the governments on oil exports. "With American technology, American partnership, Venezuela can be transformed."
U.S. refineries on the Gulf Coast can process Venezuela's heavy crude grades and were importing some 500,000 barrels per day before Washington first imposed energy sanctions on Venezuela.
PDVSA has already had to cut production due to the embargo, because it is running out of storage for the oil. Without a way to export oil soon, it would have to cut production more, one of the sources said.
Oil traders reacted to news of the deal talks on Tuesday. Differentials for some heavy oil grades in the U.S. Gulf slipped around 50 cents per barrel on Tuesday on the prospect of more Venezuelan supplies.
