US President Donald Trump announced on January 6 that Venezuelan authorities will turn over 30mn to 50mn barrels of sanctioned crude to the US, redirecting exports from China to the US.
The oil is worth up to $3bn, according to Trump and will be sold at market prices.
“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,” he wrote on his Truth Social platform.
“It will be taken by storage ships and brought directly to unloading docks in the United States,” Trump said. “I have asked Energy Secretary Chris Wright to execute this plan, immediately.”
Unable to export as much oil since a US embargo was imposed in mid-December, Venezuela has reported millions of barrels are in storage tanks or floating in ships at sea. Reportedly a flotilla of US oil tankers is on its way to Venezuela to pick up the oil to ship it back to US refineries, which are geared to deal with the country’s extremely sour (high sulphur content) oil blends.
Thanks to sanctions on most Venezuelan exports, oil storage in the country is close to overflowing and production will have to be shut down soon without a restart of exports. An end to Washington’s naval blockade is timely and will be welcomed by the new government of Delcy Rodríguez who has taken over following Operation Maduro on January 3 that ousted the previous president.
Last year Venezuela produced 800,000 barrels a day, down from its previous peak production of 3.5mn a day, and it exports just under two-thirds of its output to China.
The Trump administration has also made it clear that Caracas must cut ties with China and Russia, which is also an important partner in the country’s oil business.
The exports will initially be handled by Chevron, the only US company with a Office of Foreign Assets Control (OFAC) sanctions waiver licence, that allows it to work in Venezuela in joint ventures with the local oil companies and expport oil to the US.
Chevron has been in talks with the country’s state oil company Petróleos de Venezuela S.A. (PDVSA) about restarting the oil trade.
Short term gains will be slow in coming
Venezuela’s oil sector that is based on the giant Orinoco Belt has been badly run down by decades of neglect and corruption. Venezuela has proven reserves of 303bn barrels of oil, but the dilapidated state of its refineries and transport infrastructure means it will take billions of dollars of investment and several years for production to recover.
Analysts at Kpler said that investment starts immediately Venezuela could add 200,000-300,000 barrels a day to its output over the next two years, but it would take 10-15 years for production to regain its 1970s peak output.
As reported by bnl IntelliNews, Venezuela is at an economic crossroads. The US intervention could bring in fresh investment and open up the country to renewed oil exports that will bring in badly needed cash, but beyond increasing the export revenues, the country needs 'root and branch' reforms that are not part of the Trump plans for the country so far. In recent comments, Trump has made it very clear that for now he is fully focused on the oil business and any economic or political reforms will come later – if at all.
Venezuela’s acting president Rodríguez pushed back at Trump’s comments that he will take control of the Venezuelan economy. In televised comments, she said on January 6 that “no foreign power was governing the country.”
“We are here governing alongside the people, and no one else,” Rodríguez said on state TV. “There is no external agent governing Venezuela.”
The restart of exports is at a small scale as 50mn barrels of oil is equivalent to 50 days of production, the Financial Times reports. The plan will intensify criticism that the attack on Venezuela is contrary to international law and a mere asset grab of Venezuela’s most valuable resource.
Cutting off China
It is also seen as a political move as the US is not in need of oil. It is a net exporter of oil thanks to its shale oil production. Part of Trump’s goal is to cut off Venezuela’s exports of oil to China.
The Trump administration told Venezuela's interim president that the regime must meet the White House's demands before being allowed to pump more oil, ABC News reports. First, Caracas must sever economic ties with China, Russia, Iran, and Cuba. Second, Venezuela must agree to partner exclusively with the US on oil production and favour America when selling heavy crude oil, they reportedly said.
Secretary of State Marco Rubio told lawmakers in a private briefing on January 5 that the US estimates that Caracas has only a couple of weeks before it will become financially insolvent without the sale of its oil reserves.
Moreover, thanks to OPEC production increases there is currently a glut of oil in the global market of some 4mn bpd, according to the International Energy Agency (IEA). However, the Trump administration is keen to cut China off from its supplies of oil as part of the US’ new “Donroe Doctrine” to control the Western Hemisphere and to contain geopolitical rivals that was led out in the recently released National Security Strategy (NSS).
Ending Venezuelan oil exports to China will make little difference to Beijing, say energy analysts. “There is a narrative that Venezuela somehow could deal a blow to China's energy supply.” Says political commentator Arnaud Bertrand. “The numbers completely disprove that.”
China is 80% energy independent after it became the global green energy champion. China is currently the most energy independent country on earth, says Bertrand. Of the 20% of its energy that it does import, Venezuela’s oil only makes up 2% of the total, according to the US government's own numbers.
“So, Venezuela accounts for only 2% of 20% of China's energy, meaning just 0.4%. In other words, the truth is that it's merely a margin of error in China's energy supply,” says Bertrand. “China is significant FOR Venezuela which depends on China for ~76-85% of its exports, but Venezuela is just not significant at all for China, energy-wise.”
Experts warn Venezuela oil production could fall by a third in the next four weeks to as low as 600,000 barrels a day if the details of restarting exports are not solved due to lack of storage space, the FT reports. Production cuts have already been implemented at joint ventures with China National Petroleum Corporation.
Venezuela also needs access to imported naphtha, a dilutant needed for Venezuela treacle-like heavy crude that is impossible to handle otherwise. Previously Russia was Venezuela’s primary supplier of naphtha, although it has also bought naphtha from the US as well.
Venezuela’s crude exports have already fallen more than 30% since Trump imposed a “total and complete shutdown” of sanctioned tankers transporting oil from the country’s ports last month, fuelling an escalating economic crisis in the country.
US seizes Russian tanker despite submarine escort stoking tensions
The United States has seized an oil tanker, now known as the Marinera and registered under the Russian flag, after a week-long pursuit, Reuters has reported, citing US officials.
"The seizure, which could stoke tensions with Russia, came after the tanker, originally known as the Bella-1, slipped through a U.S. maritime 'blockade' of sanctioned tankers and rebuffed U.S. Coast Guard efforts to board it," the news agency said in a statement on Wednesday.
Russia sent a submarine and naval assets to escort a rusting oil tanker formerly known as Bella 1, now renamed Marinera, in a significant escalation of maritime tensions with the US, Interfax reported on January 7.
The operation was carried out by the Coast Guard and the US military that has been following the tanker for several days. A Russian warship and a Russian submarine, sent to escort the tanker. were nearby during the operation but did not intervene, according to reports.
The US alleges the seized tanker is part of a global shadow fleet ferrying sanctioned oil, had attempted to dock in Venezuela but failed to load cargo. Despite being empty, the US Coast Guard began pursuing the ship in December as part of a broader crackdown on illicit oil shipments, including black-market crude allegedly sold by Russia.
According to US officials cited by the WSJ, the tanker’s crew repelled a US boarding attempt and fled into the Atlantic, where they hastily painted a Russian flag on the hull, changed the vessel’s name to Marinera, and reflagged it under the Russian registry—moves experts describe as highly irregular.
Russia’s navy is now accompanying the tanker as it sails approximately 300 miles south of Iceland, reportedly en route to Murmansk via the North Sea. Open-source vessel tracking confirms its position in the Eastern Atlantic.
“Once it’s legitimately registered, it gets the protection of the flag under international law,” said retired Rear Admiral Fred Kenney, former director of legal affairs at the International Maritime Organization. “It’s not retroactive—you can’t say it was stateless two weeks ago so we’re going to say it’s stateless now.”
The White House has not commented on the latest developments, but US Southern Command stated on social media that it remained committed to “stand against sanctioned vessels and actors transiting through this region.”
The Russian Foreign Ministry said it was observing the situation “with concern,” according to state agency RIA Novosti. Meanwhile, state-backed broadcaster RT published video footage purportedly from the Marinera showing a US Coast Guard cutter trailing the vessel.
The tanker previously operated under the name Bella 1 and was sanctioned by the US for allegedly carrying Iranian oil on behalf of terrorist-designated entities. At the time of the attempted US interdiction, the vessel was considered stateless and flying a false flag, the White House said, which is illegal under maritime law.
Experts say Russia’s decision to grant the ship a flag without inspection deviates from standard practice.
“Will Russia step in and protect the dark fleet on a regular basis? That would undercut the argument that they have legitimate ties to the vessels,” said William Baumgartner, former judge advocate general and chief counsel for the Coast Guard. “If they repeat this, it does raise the question of whether this is a legitimate change in registry, or if it appears to be done for nefarious reasons,” the Wall Street Journal reports.
Washington has previously seized two other tankers—Skipper and Centuries—linked to the shadow oil fleet. Since Russia’s 2022 invasion of Ukraine and subsequent Western sanctions, the fleet has expanded to more than 1,000 vessels with opaque ownership structures.
In a related story, another US Coast Guard vessel intercepted another tanker linked to Venezuela in Caribbean waters, as the US continues to impose a naval quarantine of vessels from Venezuela that are subject to sanctions, Reuters reports.
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