How America Plans to Refill Its Emergency Oil Stockpile Using Venezuelan Crude
The Trump administration is exploring a workaround to America’s Strategic Petroleum Reserve problem: swapping heavy Venezuelan crude for U.S. medium sour barrels that can actually go straight into SPR caverns.
According to Reuters, the Department of Energy is considering moving Venezuelan heavy crude into commercial storage at the Louisiana Offshore Oil Port, while U.S. producers deliver medium sour crude into the SPR in exchange. It’s a crude-for-crude swap designed to solve a very practical issue that Washington rarely likes to admit exists.
Not all oil belongs in the SPR.
The reserve was built to hold mostly medium and heavy sour barrels. This is inconvenient because the US has an abundance of light, sweet shale crude. That mismatch has quietly complicated every refill effort since the reserve was drained during the 2022 price spike. As of the latest EIA data, SPR inventories sit just under 400 million barrels, barely more than half of capacity.
Venezuelan heavy crude fits into the SPR better than much of what the U.S. pumps today—on paper. But in practice, it’s not that simple. Heavy Venezuelan oil often needs blending, specialized handling, and infrastructure that the SPR itself doesn’t provide. Solution? Park the Venezuelan barrels elsewhere and backfill the reserve with U.S. medium sour crude.
This isn’t quite an SPR refill either. It’s a logistical sleight of hand that highlights how boxed-in the refill strategy has become. Buying hundreds of millions of barrels outright would cost tens of billions of dollars. Slow-walking purchases risks turning the SPR into a permanent half-empty museum exhibit.
The irony is that the U.S. doesn’t lack oil. It lacks the right oil in the right place at the right time. Net imports are negative, production is near record highs, and yet Washington is still improvising to make the reserve work as designed in the 1970s.
By Julianne Geiger for Oilprice.com
The Trump administration is exploring a workaround to America’s Strategic Petroleum Reserve problem: swapping heavy Venezuelan crude for U.S. medium sour barrels that can actually go straight into SPR caverns.
According to Reuters, the Department of Energy is considering moving Venezuelan heavy crude into commercial storage at the Louisiana Offshore Oil Port, while U.S. producers deliver medium sour crude into the SPR in exchange. It’s a crude-for-crude swap designed to solve a very practical issue that Washington rarely likes to admit exists.
Not all oil belongs in the SPR.
The reserve was built to hold mostly medium and heavy sour barrels. This is inconvenient because the US has an abundance of light, sweet shale crude. That mismatch has quietly complicated every refill effort since the reserve was drained during the 2022 price spike. As of the latest EIA data, SPR inventories sit just under 400 million barrels, barely more than half of capacity.
Venezuelan heavy crude fits into the SPR better than much of what the U.S. pumps today—on paper. But in practice, it’s not that simple. Heavy Venezuelan oil often needs blending, specialized handling, and infrastructure that the SPR itself doesn’t provide. Solution? Park the Venezuelan barrels elsewhere and backfill the reserve with U.S. medium sour crude.
This isn’t quite an SPR refill either. It’s a logistical sleight of hand that highlights how boxed-in the refill strategy has become. Buying hundreds of millions of barrels outright would cost tens of billions of dollars. Slow-walking purchases risks turning the SPR into a permanent half-empty museum exhibit.
The irony is that the U.S. doesn’t lack oil. It lacks the right oil in the right place at the right time. Net imports are negative, production is near record highs, and yet Washington is still improvising to make the reserve work as designed in the 1970s.
By Julianne Geiger for Oilprice.com
Oil Majors Tell Washington They Want PDVSA Out of the Way
International oil companies are wasting no time testing how serious Washington and Caracas really are about reviving Venezuela’s oil industry. And their opening demand is refreshingly blunt: if we’re going to invest, we need to control our barrels.
According to Reuters sources, international oil executives and lawyers are pushing for fast, targeted changes to Venezuela’s hydrocarbons law that would allow foreign partners to export the oil they produce directly, rather than handing it over to state oil company PDVSA to sell on their behalf. The ask is narrow by design. Leave PDVSA as majority owner, they say, but let international partners control their share of production, access export terminals, and—most importantly—get paid quickly.
Oil companies are likely to be sticklers on the last point. Under the current framework, PDVSA controls sales and deposits proceeds into joint venture accounts. That system collapsed under U.S. sanctions, leaving billions of dollars owed to partners including Chevron, ENI, and Repsol. For oil companies with long memories, Venezuela isn’t short on geology—it’s short on trust.
The industry is also pushing to roll back extra taxes layered onto the law in 2021, which pushed Venezuela’s government take to some of the highest levels in Latin America. Companies are signaling they can live with royalties and income tax. Extra taxes, opaque fees, PDVSA-controlled sales, delayed payments, or contracts open to interpretation, not so much.
This legal pressure campaign dovetails neatly with the Trump administration’s broader strategy. According to a Friday interview with Axios, Energy Secretary Chris Wright said the U.S. is pursuing oil and critical minerals deals with Venezuela as part of a plan to stabilize the country economically and redirect exports away from China. The goal, Wright said, is higher production, cleaner flows, and a more predictable business environment—without U.S. government subsidies.
What’s emerging is a pragmatic alignment. Washington wants oil flowing under U.S. supervision. Oil companies want export control and legal clarity. Caracas wants cash flow and investment yesterday.
By Julianne Geiger for Oilprice.com
International oil companies are wasting no time testing how serious Washington and Caracas really are about reviving Venezuela’s oil industry. And their opening demand is refreshingly blunt: if we’re going to invest, we need to control our barrels.
According to Reuters sources, international oil executives and lawyers are pushing for fast, targeted changes to Venezuela’s hydrocarbons law that would allow foreign partners to export the oil they produce directly, rather than handing it over to state oil company PDVSA to sell on their behalf. The ask is narrow by design. Leave PDVSA as majority owner, they say, but let international partners control their share of production, access export terminals, and—most importantly—get paid quickly.
Oil companies are likely to be sticklers on the last point. Under the current framework, PDVSA controls sales and deposits proceeds into joint venture accounts. That system collapsed under U.S. sanctions, leaving billions of dollars owed to partners including Chevron, ENI, and Repsol. For oil companies with long memories, Venezuela isn’t short on geology—it’s short on trust.
The industry is also pushing to roll back extra taxes layered onto the law in 2021, which pushed Venezuela’s government take to some of the highest levels in Latin America. Companies are signaling they can live with royalties and income tax. Extra taxes, opaque fees, PDVSA-controlled sales, delayed payments, or contracts open to interpretation, not so much.
This legal pressure campaign dovetails neatly with the Trump administration’s broader strategy. According to a Friday interview with Axios, Energy Secretary Chris Wright said the U.S. is pursuing oil and critical minerals deals with Venezuela as part of a plan to stabilize the country economically and redirect exports away from China. The goal, Wright said, is higher production, cleaner flows, and a more predictable business environment—without U.S. government subsidies.
What’s emerging is a pragmatic alignment. Washington wants oil flowing under U.S. supervision. Oil companies want export control and legal clarity. Caracas wants cash flow and investment yesterday.
By Julianne Geiger for Oilprice.com
Oil’s Problem Isn’t Iran or Russia — It’s Too Much Oil
- Oil prices are retreating after a geopolitics-driven spike, as the glut narrative regains control.
- Rising inventories, sanctioned crude weighing on tanker data, and new Venezuelan barrels reinforce oversupply fears.
- Geopolitical risks still lurk, from Iranian unrest to drone attacks near key export routes, but so far they have failed to override expectations of ample supply and weaker price support.
Crude oil prices are in retreat after rising on the possibility of U.S. strikes on Iran. Before the retreat, however, Brent crude and WTI had jumped to the highest in months, countering bearish forecasts for the year—and tearing traders between geopolitics and fundamentals.
In fundamentals, the majority of observers and forecasters are unanimous that the supply of crude oil is substantially higher than demand. In fact, Goldman Sachs recently revised its price predictions for 2026, saying it now expected Brent crude to go even lower after shedding about a fifth of its value last year.
“Rising global oil stocks and our forecast of a 2.3mb/d surplus in 2026 suggest that rebalancing the market likely requires lower oil prices in 2026 to slow down non-OPEC supply growth and support solid demand growth, barring large supply disruptions or OPEC production cuts,” Goldman said earlier this week—even though protests in Iran were already making headlines and pushing the benchmarks higher.
On the other hand, the effective takeover by the United States of Venezuela’s oil industry has had an understandably bearish effect on prices. This week, a Washington official told media that the U.S. has sold the first batch of Venezuelan crude for $500 million, and more sales would follow. In terms of fundamentals, this strengthens the case for a bearish mood. However, statements by oil industry executives urging caution about the possibility of a quick turnaround in Venezuelan oil production have had a restraining effect on that mood.
Meanwhile, drone strikes on three tankers in the Black Sea fueled a new bout of supply disruption concern, to add to expectations of possible disruption in Iranian oil flows abroad. A Reuters report cited an unnamed source as saying Kazakhstan had suffered a 35% drop in its oil output over the first two weeks of January because of attacks that also included strikes on the Caspian Pipeline Consortium by Ukrainian forces. Kazakhstan has called on the United States and the European Union to help secure oil transport in the Black Sea.
Speaking of the European Union, reports emerged this week saying Brussels was planning a further cut in its price cap for Russian oil in a bid to reduce Russia’s oil revenues by tying Western insurance coverage to the price cap. The new level of the price cap will be set at $44.10 per barrel from next month. So far, the price caps have failed to cause much pain to the Russian budget, but the EU considers them a working mechanism to hurt Russia’s economy in a bid to make it withdraw from Ukraine.
Perhaps the most bullish development for oil from the past few days was the signal, from President Donald Trump, that he was not excluding the possibility of a military strike against Iran. That signal, however, has been quite quickly replaced by observations by the U.S. president that the Iranian government was easing its crackdown on the protesters, reducing the likelihood of a military strike. That’s when oil’s retreat began and continues today, in evidence that the glut narrative holds sway over the oil market.
Expectations of further growth in oil production remain dominant on that market, with forecasters such as the U.S. Energy Information Administration and the International Energy Agency both predicting further supply growth, even as OPEC pauses its unwinding of production cuts implemented back in 2022 to prop up prices. Even so, shale drillers are signaling they would not be happy with WTI closer to $50 than to $60, and production growth is slowing. Indeed, the EIA forecast in its latest Short-Term Energy Outlook that U.S. oil production will flatten this year, even inch down and extend that decline into 2027.
This has been ignored by the oil market so far, even though U.S. oil production has been the main driver behind bearish market predictions thanks to its fast and significant growth. That growth is now gone but everyone seems to be ignoring the fact in the firm belief there is already too much oil in the world—and the data seems to support this, with media citing a Kpler calculation there were some 1.3 billion barrels of crude on water in December, which was the highest since 2020 and the pandemic lockdowns.
Reuters’ Ron Bousso, however, noted in a recent column that a quarter of that oil comes from Russia, Iran, and Venezuela—the sanctioned producers. That oil takes longer to find buyers because of the sanctions but it does find buyers, Bousso pointed out. This suggests the number of barrels on tankers is not necessarily the most accurate indication of a physical glut, especially in light of recently released Chinese import data, showing oil imports into the country hit a record both in December and in 2025 as a whole. Predicting oil prices is notoriously unreliable. These days it is even more unreliable than usual, it seems, as conflicting narratives and agendas keep clashing, making the oil market a confusing place to be.
By Irina Slav for Oilprice.com
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