The remarks highlight the significance of crude oil in President Donald Trump’s strategy following the ousting of Venezuelan leader Nicolas Maduro in a raid on Caracas last Saturday.
“We need to exert that leverage and control over oil sales to instigate the necessary changes in Venezuela,” US Energy Secretary Chris Wright stated at the Goldman Sachs Energy, CleanTech & Utilities Conference in Miami.
Wright noted that the generated revenue would help stabilize Venezuela’s economy and eventually compensate oil giants Exxon Mobil and ConocoPhillips for losses incurred when their assets were nationalized by former President Hugo Chavez almost two decades ago.
US Vice President JD Vance emphasized that controlling Venezuela’s oil equates to controlling the country.
“We manage the energy resources, advising the regime: ‘You can sell the oil as long as it serves America’s national interest; selling is not permitted otherwise,” he shared on the Fox News “Jesse Watters Primetime” program.
“This allows us to apply significant pressure on the country without risking American lives or endangering any citizens,” he added.
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Democratic lawmakers criticized this strategy, with Connecticut Senator Chris Murphy likening it to seizing Venezuela’s oil at gunpoint. Concurrently, industry analysts cautioned about the potential for political instability as the nation navigates a difficult balance between criticizing Maduro’s regime and appeasing the U.S.
Despite possessing the world’s largest oil reserves, this OPEC member nation contributes only about 1% to global supply due to decades of underinvestment, which has significantly diminished production.
STORED OIL MOVING TO MARKET FIRST
Energy Secretary Wright indicated that the US would first market stored Venezuelan oil, followed by the sale of ongoing future production, with revenues directed to accounts managed by the US government.
Such transactions have already begun, and the US has enlisted “the world’s leading commodity marketers and key banks” to facilitate and support these sales, according to a statement from the U.S. Department of Energy.
Wright mentioned he is in talks with US oil companies to determine the conditions necessary for them to re-enter Venezuela and assist in augmenting the nation’s production long-term.
“The resources are vast. This should be a wealthy, prosperous, peaceful energy powerhouse,” he remarked.
On Tuesday, Washington revealed a deal with Caracas to initially export up to $2 billion worth of Venezuelan crude to the United States, indicating that interim Venezuelan President Delcy Rodriguez’s government is heeding Trump’s call to welcome US oil companies or face the possibility of further military intervention.
Trump stated on Wednesday via Truth Social that Venezuela has consented to use the proceeds from its oil sales to buy American products.
“A wise choice, and a significant benefit for the people of Venezuela and the United States,” he commented.
Venezuela’s state-run oil company PDVSA reported progress in negotiations with the United States regarding oil sales. PDVSA board member Wills Rangel informed Reuters that the US must acquire cargoes at fair market rates.
Shares of US refiners Marathon Petroleum, Phillips 66, and Valero Energy rose between 2.5% and 5%.
WHITE HOUSE MEETINGS
Trump is slated to meet with leaders of major oil companies at the White House on Friday to discuss strategies for boosting Venezuela’s oil production.
Representatives from Exxon Mobil, ConocoPhillips, and Chevron—the three largest US oil firms—are expected to attend, according to a source familiar with the planning.
Chevron Vice Chairman Mark Nelson will represent the company at the meeting, another source revealed.
The companies, all of which have prior experience in Venezuela, have opted not to comment.
Wright mentioned in an interview with CNBC on Wednesday afternoon that he spoke with the CEOs of all three companies immediately after Maduro’s capture and anticipated their involvement in rehabilitating Venezuela’s oil sector.
“Will they invest billions in building new infrastructure in Venezuela next week? Certainly not,” he explained. “However, they are keen to be productive advisers and facilitators in that process.”
Wright also indicated to CNBC that some of the proceeds from Venezuelan oil sales could eventually be used to reimburse ConocoPhillips and Exxon Mobil for losses when they exited Venezuela, but only after the country’s economy has been stabilized.
Currently, Chevron is the only US oil major still active in Venezuela’s oil fields.
In the 1970s, Venezuela was producing as much as 3.5 million barrels per day. However, mismanagement and limited foreign investment have led to a drastic decline in production, which averaged about 1.1 million bpd last year.
Wright expressed optimism that Venezuelan production could be ramped up relatively quickly with an infusion of equipment and technology; however, a full recovery to historical production levels would take years.
