Venezuela oil shipments to US set to continue as sanctions eased

Venezuela is set to ship sanctioned crude oil to the US on an open-ended basis after Washington agreed to selectively ease restrictions to allow the oil to be sold on international markets, CNBC reported citing sources close to the White House.

President Donald Trump said on January 7 that Venezuela would initially hand over between 30mn and 50mn barrels of oil, which would be sold at market prices. He stated in a Truth Social post that proceeds from the sales would be controlled by the US administration to ensure they are used for the benefit of both Venezuela and the US.

People familiar with the agreement said the volumes outlined by Trump represent only the first tranche, with shipments expected to continue indefinitely. US sanctions will be partially rolled back to permit the transport and sale of Venezuelan crude, while proceeds from the sales will be deposited into accounts under US control, with funds released to Venezuela at Washington’s discretion.

US energy secretary Chris Wright later confirmed the plan during a conference hosted by Goldman Sachs in Miami on January 7. “We’re going to market the crude coming out of Venezuela,” Wright said. “First this backed up, stored oil and then indefinitely, going forward, we will sell the production that comes out of Venezuela into the marketplace.”

Venezuelan oil exports have historically been directed mainly towards China due to US sanctions. Under the new arrangement, shipments will be rerouted to the US, with Trump stating that oil stored on tankers will be transported directly to US receiving terminals.

Venezuela, a founding member of OPEC, holds the world’s largest proven crude oil reserves but is producing only about 800,000 barrels per day due to effects of long-standing sanctions, mismanagement and widespread corruption, according to data from energy consultancy Kpler cited by CNBC. By comparison, US crude output stands at around 13.8mn barrels per day.

Trump has indicated that increased US involvement in Venezuela’s oil sector is a central objective following the military action that ousted president Nicolas Maduro on January 3. Vice-president Delcy Rodriguez, who is reportedly cooperating with the US to carry out unspecified transition plans, was sworn in as Maduro's replacement on January 5. Trump has urged major US oil firms to participate in rebuilding the country’s energy infrastructure, although companies have so far made no public commitments. Wright is expected to hold meetings with oil executives on Venezuela during the conference, a US Department of Energy spokesperson told CNBC.