US President Donald Trump announced that Venezuela will deliver between 30 and 50 million barrels of high-quality oil to the United States, despite the oil being subject to sanctions.
According to Trump, the proceeds from the sale of the oil will be used to benefit both countries, with the allocation of funds directly controlled by the US government.
Following the announcement, the price of US benchmark crude oil, West Texas Intermediate (WTI), fell by up to 2.4%, reflecting the market's reaction to the potential increase in supply in the short term.
If the figure is realized, the amount of oil is equivalent to about 30 to 50 days of Venezuelan production before the partial US sanctions were implemented, but is still far below the country's historical production levels.
At current prices, the total value of the oil is estimated to reach up to US$2.8 billion.
So far, the US Department of Energy and the White House Office have not provided further feedback, while Venezuelan authorities have also not responded to requests for comment.
Despite Venezuela having the world’s largest proven crude oil reserves, its production has been severely depleted by a lack of investment, decades of neglect and the withdrawal of foreign oil companies.
Venezuela currently accounts for less than 1% of global oil supply, and experts say restoring production will require billions of dollars in investment and years.
Venezuela also faces a surplus of unshipped oil, with storage accumulating in tanks and ships since US sanctions began last month. Maritime intelligence firm Kpler has warned that the storage capacity could be full within weeks if exports are not released soon.
Analysts have stressed that while the 30 to 50 million barrels may seem large politically, the impact on global oil markets is limited and one-off, not a permanent change in supply.
Trump has also ordered Energy Secretary Chris Wright to implement the plan immediately, but it is not yet clear which company will handle the oil shipments or whether it will involve Chevron Corp, the only US company still operating in Venezuela under sanctions exemptions.
According to US media reports, the Trump administration has also demanded that Venezuela cooperate exclusively with the United States in the oil sector and prioritize the US in heavy oil sales, while reducing economic ties with China, Russia, Iran and Cuba.
Before the arrest of former Venezuelan President Nicolas Maduro, China was the country's largest buyer of oil. However, US sanctions have now nearly halted that trade and increased costs for Chinese buyers, amid escalating geopolitical tensions.
Overall, Trump's announcement is seen as more political and symbolic, with the actual impact on global oil markets remaining limited.
Venezuela is still far from achieving a full recovery, and each barrel of oil released now reflects more of a surplus than a decline in production, rather than a new surge in global supply.
