President Donald Trump announced on March 5, 2024, that Venezuela will transfer between 30 million and 50 million barrels of oil to the United States. The oil will be sold at market value, with proceeds managed by the U.S. government. In a message posted on Truth Social, Trump stated, “I am pleased to announce that the Interim Authorities in Venezuela will be turning over between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil, to the United States of America.”
According to Trump, this transaction is intended to benefit both the Venezuelan and U.S. populations. He has directed Energy Secretary Chris Wright to implement the plan immediately, stating that the oil will be transported by storage ships directly to U.S. unloading docks.
A senior administration official, who spoke on condition of anonymity, confirmed to CNN that the oil has already been produced and is currently stored on boats. It is anticipated that these shipments will be directed to U.S. facilities in the Gulf of Mexico for refining.
While the transfer of 30 to 50 million barrels may seem substantial, it is worth noting that the United States has consumed over 20 million barrels of oil per day in recent months. An influx of this oil could potentially lower prices slightly, but it may not significantly impact gas prices for American consumers. Former President Joe Biden released approximately 180 million barrels from the U.S. Strategic Petroleum Reserve in 2022, which resulted in a modest reduction of gas prices by between 13 cents and 31 cents per gallon over four months, according to a Treasury Department analysis.
Following Trump’s announcement, U.S. oil prices fell by about $1 per barrel, or just under 2%, settling at $56. If the oil is sold at current market rates, it could generate between $1.65 billion and $2.75 billion for the U.S., given Venezuelan oil is trading around $55 per barrel.
The oil being transferred is part of Venezuela’s stockpiles accumulated since the U.S. imposed an oil embargo late last year. However, the transfer of such a significant quantity of oil may deplete Venezuela’s own reserves. The oil is likely sourced from both onshore storage and seized tankers previously transporting crude oil. Venezuela reportedly has a storage capacity of about 48 million barrels, which is nearing full capacity, according to Phil Flynn, senior market analyst at the Price Futures Group. Estimates suggest that the tankers were carrying between 15 million and 22 million barrels of oil.
The timeline for this transfer remains unclear, though the senior administration official indicated it would occur swiftly, as heavy crude oil cannot be stored for extended periods.
As developments unfold, the implications of this agreement for both nations will be closely monitored, particularly in the context of international oil markets and economic conditions.
