Details Emerge Regarding U.S. Policy on Venezuelan Crude Oil

Oil traders and U.S. refiners are rushing to position for access to Venezuelan crude oil after the Trump administration said it would take control of as much as 50 million barrels, one of the largest unexpected supply flows in years, Bloomberg reported. The U.S. strategy — announced initially in a late-night social media post Tuesday from President Trump and more details coming Wednesday from Energy Secretary Chris Wright — “puts the federal government into direct involvement in the international oil market and promises to reinvigorate flows of Venezuelan crude to American refineries after years of sanctions. The return of Venezuelan barrels to U.S. buyers could mark one of the most significant shifts in global energy markets in recent years. It has already sent Canadian crude prices plunging and weighed on benchmark oil futures. The country has the world’s largest oil reserves, but its production has slumped below 1 million barrels a day after decades of underinvestment, trade sanctions and economic isolation,” said the Bloomberg report. Trump said in a New York Times interview published today that the U.S. would be running Venezuela and extracting its oil for years. “We will rebuild it in a very profitable way,” he told the newspaper. While top U.S. oil companies are set to meet with Trump at the White House in coming days, several drilling firms are still likely to be wary of a quick return or entry into Venezuela without assurances and clarity about the political and legal landscape, Bloomberg said.
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