The ongoing U.S. naval blockade of Venezuela has caused an estimated $700 million in damage, coupled with the seizure of two more oil tankers on January 7, as President Donald Trump aims to sell more Venezuelan crude to U.S. refineries and persuade U.S. oil companies to return to the troubled country.
The cost to operate the USS Gerald R. Ford and its carrier strike group has exceeded $9 million per day (adjusted for inflation) since it was ordered to Latin American waters in October, according to a previous report by the Center for a New American Security. The charges do not take into account boat attacks that began in late August, which have killed more than 100 people so far, or the January 4 attack in Venezuela that led to the arrests of leader Nicolas Maduro and his wife.
Trump argued that the United States did not want a long-term occupation as long as Maduro’s vice president and now acting president Delcy Rodriguez obeyed the United States. Promote American Petroleum Corporation Working in Venezuela Rebuild dilapidated industries Let oil and dollars flow again.
The White House did not dispute the blockade’s financial data or provide more information, but spokesperson Anna Kelly said in a statement that Maduro’s arrest has saved American lives, stopped the flow of drugs and criminals, initiated deterrence across the Western Hemisphere and created economic opportunity for Venezuelans and Americans.
David Goldwyn, a fellow at the Atlantic Council and the Obama administration’s special envoy for international energy affairs at the State Department, said wealth Trump is pursuing an “incoherent strategy.”
“A lot was spent and very little was gained,” Godwin said. “It’s really hard to see what the upside is. Maduro has been ousted, but other members of the regime are still in place.”
“He tried to provide American companies with special access to resources, but that reward seemed unpopular with most people.”
In fact, Trump is scheduled to meet with oil company executives on January 9, including from Chevron, Exxon Mobiland ConocoPhillips. The companies did not respond to requests for comment.
Chevron is the only U.S. oil company operating in Venezuela (with a special license), producing nearly 20% of the country’s oil.
Trump said U.S. oil companies are “ready to step in” and spend billions of dollars to rebuild Venezuela’s energy infrastructure and significantly increase oil flows to bring revenue back to Venezuela and the United States.
But the reality is different. Once the main player exits Venezuela’s oil production has plummeted from 3.2 million barrels per day in 2000 to less than 1 million barrels today due to mismanagement, underinvestment and escalating U.S. sanctions. Research firm Rystad Energy said more than doubling Venezuela’s current oil production could take until 2030 and cost about $110 billion.
In addition to Chevron, U.S. companies have previously expressed reservations about returning home due to political instability, high costs and weak oil prices. ConocoPhillips and ExxonMobil still owe Venezuela billions of dollars after their assets were seized in a 2007 international court ruling.
“We’ve been expropriated twice by Venezuela. We have to see what happens with the economy,” Exxon Mobil CEO Darren Woods told Bloomberg in November. “We have our history there.”
How Trump plans to profit from Venezuelan oil
At the same time, Trump said on social media that over time, the United States will need to sell 30 million to 50 million barrels of Venezuelan crude oil from the United States. The proceeds will be controlled by the White House, but details remain vague.
Presumably, more oil will be sold to U.S. refineries configured to process heavy crude from Venezuela, with Venezuela’s state oil company PDVSA receiving the bulk of the proceeds.
Depending on the barrel count, and based on current U.S. oil benchmark prices, the oil could be worth between $1.6 billion and $2.8 billion.
PDVSA confirmed in a statement on January 7 that it was negotiating with the United States under a framework similar to that with Chevron and other international companies. “PDVSA endorses its commitment to continue building alliances to promote national development that benefits the Venezuelan people and contributes to global energy security.”
Matt Reed, vice president of geopolitical and energy consulting firm Foreign Reports, said the effort would mean the U.S. would auction barrels of oil through the U.S. Department of Energy and hold the proceeds in escrow as leverage for cooperation with Venezuela. Recently, about 80% of Venezuela’s oil exports have been sold to China, and nearly 15% to the United States.
“This sounds like a twist on the old U.N. ‘oil-for-food’ program, which allowed Iraq to sell oil but only get the revenue for necessities like food and medicine. The difference this time is that Washington will decide where the oil goes. U.S. refiners will likely get priority based on demand along the Gulf Coast,” Reed said. “It is unclear how or if the United States will benefit from this. Instead, Washington is counting on using this leverage to apply pressure in Caracas.”
As for Trump’s oil summit with executives, Reed said, “Washington can provide incentives, but only Caracas can convince American businesses to take risks and make long-term investments.”