Market News
Oil Declines as Trump Says Venezuela Will Give Some Crude to US - BLOOMBERG
(Bloomberg) — Oil extended losses after Washington moved to exert greater control over Venezuela’s oil industry, with President Donald Trump saying the country would turn over millions of barrels of crude to the US.
Brent (BZ=F) fell toward $60 a barrel after closing 1.7% lower on Tuesday, while West Texas Intermediate (CL=F) traded near $56. Venezuela’s interim authorities will be giving up as many as 50 million barrels of “High Quality, Sanctioned Oil” to the US, the American president wrote in a social media post. The cache would be sold, with the proceeds benefitting both countries, he said.
Separately, ABC reported the Trump administration told Venezuela’s interim leader, Delcy Rodriguez, that her government must exclusively partner with the US on oil supply, and favor the country when selling crude. The US is demanding Caracas reduce ties to China, Russia, Iran and Cuba, ABC said. Doing so would represent a full political realignment for the nation.
Oil has lost ground since the start of the new year, following its worst annual slump since 2020. In addition to deep-seated concerns about a punishing global glut following supply hikes, the market continues to digest the fallout from the ouster of Venezuelan leader Nicolás Maduro by American forces, and what that means for oil exports and the country’s energy industry.
“Overall, the fundamental outlook remains bearish, suggesting that there is further downside,” said Warren Patterson, head of commodities strategy at ING Groep NV. The US measure eases the risk of Venezuela having to cut output due to storage constraints, reducing fears of supply disruptions, he added.
Venezuela was once an oil-producing powerhouse, but output has slumped over the past two decades and now represents 1% of global supplies. Before Maduro’s capture, the US imposed a partial naval blockade of tankers calling at the country, prompting local storage to fill and some oil wells to be shut.
Chevron Corp. (CVX) is the only American major operating in Venezuela under special US permission, and the company continues to load crude. All of the oil goes to refineries in the US, including Valero Energy Corp. (VLO) and Marathon Petroleum Corp. (MPC)
Trafigura Group and other traders will hold talks with the US about how they can return to buying Venezuelan oil as Trump is set to meet with energy executives at the White House within the next week. The president has said American companies will spend billions reviving the nation’s industry.
