US will control Venezuela oil sales ‘indefinitely’, official says

The US will control sales of sanctioned Venezuelan oil “indefinitely” as it prepares to roll back restrictions on the country’s crude in global markets, the White House said.

Officials said sales were expected to start with 30 million to 50 million barrels of oil and the revenue would be controlled by the US government in order to maintain leverage over the Venezuelan government.

“We’re going to let the oil flow,” Energy Secretary Chris Wright said at a conference with energy executives in Miami.

It’s not clear what portion of the revenues from the sale – which analysts expect to raise about $2.8bn (£2.1bn) – would be shared with Venezuela.

“We need to have that leverage and control of those oil sales to drive the changes that simply must happen in Venezuela,” Wright said, while adding that some of the money would then “flow back into Venezuela”.

White House officials said on Wednesday that they had already taken steps to start marketing the oil and the administration was working with key banks and commodity firms to execute the sales.

As part of the plan, the US is preparing to “selectively” roll back American sanctions, which have restricted sales of Venezuelan crude for decades.

The comments offered more insight into plans US President Donald Trump announced on social media on Tuesday.

He said that Venezuela would be “turning over” up to 50 million barrels of oil to the US, and it would be sold at its market price.

The money is set to be deposited into US controlled accounts, which Trump said he as president would control and use to benefit the people of Venezuela and the US.

US Secretary of State Marco Rubio said the aim was to disburse the money “in a way that benefits the Venezuelan people – not corruption, not the regime – so we have a lot of leverage to move on the stabilisation front”.

Analysts said the impact of the change in policy would depend on details, like the pace of the sales.

But the plan drew swift criticism from Democrats, with Senator Chris Murphy of Connecticut calling it “insane”.

“They are talking about stealing the Venezuelan oil at gunpoint for a period of time undefined as leverage to micromanage the country,” he told reporters. “The scope and insanity of that plan is absolutely stunning.”

Venezuela has some of the world’s largest proven oil reserves, but years of disinvestment, mismanagement and US sanctions have left it with output of only about a million barrels per day – less than 1% of global production.

That supply, which provided critical resources to the Venezuelan government, in recent years has been going primarily to China.

But that too has been disrupted in recent months after the US ramped up strikes and a blockade of Venezuelan tankers as part of its pressure campaign against Maduro.

On Wednesday, Beijing’s foreign minister condemned the US seizure of Maduro and US plans to exert control over Venezuela’s oil resources.

Trump is due to meet with oil executives at the White House on Friday.

Analysts said that in the short term, US oil firm Chevron and US oil refineries, which are set up to process the kind of “heavy” crude that is characteristic of Venezuela’s output, are well placed to benefit from increased flow of oil from Venezuela.

Chevron is the last major US oil firm operating in Venezuela, though some other European firms have outposts there.

The redirection of Venezuelan oil to the US could put pressure on Mexico and Canada, which produce similar crude and are currently the main sellers to US refineries.

Oil prices, which are already relatively low amid steady supply and muted demand expectations, slipped further over the last week on the prospect that Venezuela might have increased access to the global market.

But analysts have warned that meaningful expansion of the country’s output will take years and billions of dollars in investment, which firms may be hesitant to undertake, given less risky opportunities in the US and in other countries such as Guyana.