Venezuelan Oil Prices Surge 30% Under US Control
Edward LawsonVenezuelan crude, under new US management, now fetches 30% higher prices post-Maduro, drawing refiners, with revenues US-controlled amid political flux.
A New Premium on Venezuelan Crude
Venezuelan crude oil sold through a new US-managed program is fetching prices approximately 30% higher than just three weeks ago, according to US Energy Secretary Chris Wright. The price jump follows the removal of President Nicolas Maduro on January 3.
"We're getting about a 30pc higher realized price when we sell the same barrel of oil, than [when] they sold the same barrel of oil three weeks ago," Wright confirmed at a US Energy Association conference in Washington, D.C.
Historically, US sanctions forced Venezuelan crude to trade at a steep discount to the global benchmark, Ice Brent. Argus assessments show that Merey crude cargoes destined for Chinese ports in January were offered at a $10-12 per barrel discount to Brent futures. In contrast, at least one cargo has been offered since the US intervention at a $42 per barrel discount, with a price floor of $30 per barrel.
How the US-Managed Sales Program Works
President Donald Trump appointed Wright to oversee the sale of 30 million to 50 million barrels of Venezuelan crude currently held in both onshore and offshore storage. An administration official reported that these oil sales have already generated $500 million.
According to Wright, the revenue from these sales will be deposited into accounts controlled by the United States. These funds are intended to eventually be transferred back to Venezuela.
Details remain unclear regarding two very large crude carriers operated by a sanctioned Greek shipowner. The vessels recently departed Venezuela loaded with crude for a storage terminal in the Bahamas, but it is not confirmed if they are part of the official US-approved sales process.
US Refiners Eager for Venezuelan Supply
The potential return of Venezuelan crude to the open market is being welcomed by the US refining industry. Many refineries along the US Gulf Coast were specifically designed to process the type of heavy sour crude that Venezuela produces.
"If Venezuelan crude hits the open market, that certainly will be welcomed by those US refineries, because we're equipped to run it, we have easy access to it," said Chet Thompson, chief executive of the American Fuel & Petrochemical Manufacturers, speaking at the same conference.
Political Uncertainty and Future Funding
The Trump administration has not yet detailed how it plans to disburse the oil revenue or whether it will grant spending authority to the government of interim president Delcy Rodriguez. On Wednesday, President Trump described Rodriguez as a "terrific person," noting her government is cooperating "very well" with US demands.
On Thursday, Trump also held a private meeting at the White House with Venezuelan opposition leader Maria Corina Machado. However, the president has previously downplayed the role of the opposition in the country's future governance.
