Durrant Pate/Contributor

Global oil prices fell in early morning trading today, although they recovered some ground in morning trading in New York following reports that Venezuela will continue supplying oil to America beyond the initial 50 million barrels announced by US President Donald Trump after the American military’s capture of its President Nicolás Maduro.

The international benchmark, Brent crude, fell to just over US$60 a barrel today, while the US oil price fell by 0.9% to US$56.72 a barrel, after earlier falling below US$56. Trump announced yesterday that Venezuela would hand over 30 million to 50 million barrels of the country’s blockaded crude to the US. 

The deal would give the US president the power to sell up to US$3 billion (£2.2 billion) worth of Venezuelan crude stranded in tankers and storage facilities into an already oversupplied global market. A continuing supply of crude from Venezuela could act as a drag on oil prices, which last year recorded their steepest annual fall since the Covid pandemic and could plummet further as oil producers continue to pump more than needed by the global economy.

In addition, the US would remove some sanctions on Venezuela to allow sales of oil “indefinitely”, according to the broadcaster CNBC, which cited White House sources.

Sharp response from China

News of this supply deal raises the prospect of a disruption of Venezuela’s oil exports to China, which takes about 80% of its crude exports, potentially forcing Beijing to pay higher prices for its crude and increasing tensions with the White House. China’s foreign ministry, in a swift response, declared today that Venezuela “enjoys full and permanent sovereignty over its natural resources and economic activities”, arguing that American demands for the country to hand over its oil “violate international law, infringe upon Venezuela’s sovereignty, and harm the rights of the Venezuelan people”.

In a post on his Truth Social platform late on Tuesday, Trump advised: “That money will be controlled by me, as President.…It will be taken by storage ships and brought directly to unloading docks in the United States.” Trump has said he wants Venezuela’s interim president, Delcy Rodríguez, to give the US and private companies “total access” to Venezuela’s oil industry. Trump announced that his energy secretary, Chris Wright, will be in charge of executing the deal, noting that the oil would be taken from ships and sent directly to US ports.

Investment coming in Venezuelan oil

US oil executives from Chevron, ConocoPhillips and ExxonMobil are expected to meet Trump at the White House on Friday to discuss plans to pour billions of dollars into the industry in Venezuela. Chevron is the only US oil company that still operates in the country after the assets of ConocoPhillips and Exxon were nationalised by the former president Hugo Chávez in the mid-2000s, a move Trump has described as “the greatest theft in the history of America”. 

The US oil majors have so far declined to outline publicly any such plans for investment, and there is scepticism that big listed companies would be willing to invest in a politically unstable region amid falling global oil prices without iron-clad guarantees that their investments would be protected. There is also scepticism over whether Venezuela, which holds the world’s largest reserves of crude, could once again produce meaningful amounts after years of neglect and corruption that caused its output to fall from highs of 3.5 million barrels of oil per day (bpd) 25 years ago to about one million bpd—or less than 1% of the global market.

The multibillion-dollar investment needed to increase Venezuela’s oil production to its heyday in the late 1990s could require 15 years of work to repair the country’s degraded infrastructure and capital spending of up to $185 billion, according to analysis by Rystad Energy, a global consultancy.