President Trump’s surprise announcement that America will take millions of barrels of Venezuelan crude oil US officials and economists said if Washington and Caracas can maintain their nascent custody it could be an economic boon for the battered South American nation.
That may sound like a big deal, but economists say restoring trade ties with the US would generate much-needed cash for a country dependent on imports of food and basic goods. Trump said in Truth Social post on Tuesday that Venezuela will be handed over to America 30 million to 50 million barrels Oil, which will be sold at market price. Trump said he would personally control the proceeds “to ensure that it is used to benefit the people of Venezuela and the United States.”
Venezuela currently has more than 30 million barrels of crude oil stuck in storage that it has not been able to sell due to partial US sanctions. Selling oil at market prices instead of the deep discounts Venezuela gets on the black market could help restart an economy that has collapsed over the past decade.
“It seems contradictory,” said Alejandro Grisenti, president of Caracas, Venezuela-based business consulting firm EcoAnalytica. “But if we are able to achieve some kind of understanding between the US and Venezuela, we can easily move from a strong negative downturn to positive growth.”
The price of Venezuelan government bonds has soared this week, reaching unprecedented levels since the regime defaulted on its sovereign debt in 2017. It’s a sign, Grisanti said, that investors believe the country can rejoin the global financial system and eventually settle some $160 billion of outstanding debts.
Much of this depends on the weak political separation between the two Venezuelan government and TrumpWho had ordered the arrest of powerful Nicolas Maduro in a US military raid early Saturday. The autocratic ruler, who had ruled the country since 2013, was succeeded by his longtime deputy, Delsey Rodriguez. Venezuela’s de facto economic hegemonwhat trump said will work with America Otherwise one will have to face the wrath of American justice.
If the US does not follow through and pay Venezuela back, it would be devastating for a country where inflation is projected to reach 700% this year. The US would take 15% of Venezuela’s current annual crude oil production. Without financial compensation from the US for so much oil, the heavily import-dependent country would face massive food shortages, as it has in the past.
Some economists said that US plans to stabilize the Venezuelan economy are doomed to fail without elections and stable democratic institutions. Ricardo Hausmann, a Venezuelan economist at the Harvard Kennedy School, said Companies will need trust To invest billions of dollars into the legal system.
“There has been no reform in the oil industry in this context,” said Haussmann, a former Venezuelan planning minister. “I can absolutely see that the situation is getting worse.”
Secretary of State Marco Rubio said the oil transfer is the first phase of a three-pronged plan the US is launching for Venezuela, a stabilization step to guarantee hard-currency income on which the local economy depends heavily to import food and medicine for its 28 million people.
Under the plan, the US will also ensure that Venezuela’s oil reserves will be among the largest in the world. accessible to foreign energy companiesThe third phase involves promoting a reconciliation program that will restore political rights and free political prisoners in Venezuela,
“We feel like we’re moving forward in a very positive way,” Rubio said.
U.S. Energy Secretary Chris Wright said at a Goldman Sachs energy conference on Wednesday that the U.S. will sell oil in the marketThe money will be deposited into accounts controlled by the U,S, government before it is sent back to Venezuela, Wright said, without giving further details,
“Let the oil flow,” Wright said. “It should be a prosperous, prosperous and peaceful energy powerhouse.”
Of course, Venezuela is doing this without much choice in the matter, because Trump says he is now running the country. Much depends on Rodriguez, who may have to work hard to appease Trump and maintain unity among the various factions of the regime left by Maduro.
Former Deputy Oil Minister Ivan Romero said Rodriguez would have little time to turn things around because Venezuela’s needs are so great.
“Some people talk about a 10-year recovery program, but we can’t wait,” Romero said. “If that doesn’t happen in a few years, everyone will die.”
Petroleos de Venezuela, Venezuela’s state oil company, said negotiations were underway with the US and that trade terms would be similar to those for Chevron and other foreign companies. The company called it “a strictly commercial transaction with criteria of legality, transparency and benefits for both parties.”
By lifting oil from Venezuela, Washington would help relieve a major bottleneck. With its oil reserves nearly full and most exports blocked due to US sanctions, there were fears that Venezuela would have to shut down oil wells, a costly and risky move. The country has recently, with great effort, stabilized its production at about one million barrels per day – up from a low of about 500,000 barrels at the time of US sanctions for the first time in 2020, but well below the 3 million barrels the country produced two decades ago.
Resuming trade with the US market also means Venezuela can charge the full price for its heavy crude, such as tar. In recent years, the black market in the country has been selling at deep discounts as it has shifted the commodity from a ghost fleet of sanctioned tankers Which circumvented US sanctions and delivered oil to Asian buyers who paid Venezuelans in cryptocurrency. A large portion of the shipments to China, Venezuela’s biggest buyer, did not generate any cash at all because they went to repay old debts to Beijing.
The Trump team’s announcement also fueled speculation that the US could withdraw from the complex web of financial sanctions imposed on Venezuela, allowing greater investment flows. Trump Meeting with oil company officials On Friday.
With a series of repairs and investments, Venezuela’s oil industry has the potential to eventually boost production above 3 million barrels per day, said Clayton Siegel of the Center for Strategic and International Studies, a Washington think tank. This is about a third of Saudi Arabia’s current production.
With an investment of a few billion dollars over about 18 months, Venezuela could increase current production by about 50%, Siegel said. But to reach above 2 million barrels a day, tens of billions of dollars in repairs and new construction would be required, which could take six years or more, he said.
Venezuela needs dozens of rigs and what are called upgraders – special facilities that remove carbon and add hydrogen, as well as make major improvements to its power grid.
But none of this is possible without political stability, Siegel said. “There is good reason to be skeptical of the outlook for political stability in Caracas, as governance and transition plans remain unclear.”
On the ground in Venezuela, there were signs that citizens were not celebrating yet and were facing a shortage of greenbacks in the economy. On Binance, the crypto exchange where many Venezuelans trade the crisis-hit local bolivar currency, one US dollar is worth more than 800 bolivars, while the central bank’s official rate is 308.
“There is a huge disparity between what the international investor world thinks and what local businesses think,” said EcoAnalytica’s Grisanti.
Rodriguez, who was sworn in on Monday as Venezuela’s acting president, had over the past several years overseen an economic liberalization program under which Venezuela dismantled its state-planned model and cut generous welfare and social spending. It also eased the price and capital controls that had once restricted the trading of the US dollar.
According to the United Nations Economic Commission for Latin America and the Caribbean, looser controls helped promote micro-stabilization of the economy, which has outpaced most of the region to 6.5% growth in 2025.
Still, three out of five Venezuelans said they had difficulty affording enough food last year, according to a study published Thursday by Gallup. Only 19% of adults reported being employed full-time, one of the lowest rates in Latin America.
Write Kejal Vyas kejal.vyas@wsj.com and samantha pearson samantha.pearson@wsj.com
