U.S. push for Venezuelan oil: Ambitions and challenges

The Trump administration's push to tap into Venezuela's vast oil reserves has seen its first success, with the United States completing its inaugural sale of Venezuelan crude, valued at $500 million. An administration official told Reuters that additional oil sales are expected in the coming days and weeks.

Alongside the Venezuelan oil sale, U.S. forces on Thursday seized a sixth oil tanker linked to Venezuela, signaling a continued tightening of the U.S. blockade on Venezuela's oil exports. Shipping analytics provider Kpler revealed that the only vessels loading crude at Venezuela's ports are tankers headed for the U.S. or those transporting oil to Venezuelan refineries.

The U.S. is one of the world's largest oil producers. Despite that, it still eyes Venezuelan oil. This raises an important question: Why does the U.S. still need Venezuelan oil?

Industrial Complementarities and Geopolitical Ambitions

Although the U.S. now produces more crude than any other country, thanks to a boom in drilling for lighter shale oil, most of its refineries were designed to process heavier grades of oil. Nearly 70 percent of the U.S. refining capacity operates most efficiently with heavier crude, which is why 90 percent of U.S. oil imports are heavy sour crude, according to the American Fuel & Petrochemical Manufacturers.

Venezuela, which holds the world's largest proven oil reserves – estimated at 303 billion barrels, or about 17 percent of the global total – has a wealth of heavy sour crude, primarily located in the Orinoco Oil Belt.

Shon Hiatt, director of the Zage Business of Energy Initiative at the University of Southern California, told Al Jazeera that U.S. refineries would greatly benefit from an increase in Venezuelan oil exports. He noted that heavy Canadian crude has displaced Venezuelan crude over the years due to sanctions. If Venezuela's heavy crude exports rise again, it could push Canadian oil out of the market, as Venezuelan crude is typically sold at a lower price to U.S. refineries.

Beyond the industrial benefits, Marcus Vinicius De Freitas, a senior fellow at the Policy Center for the New South, told CGTN that the U.S. views Venezuelan oil as a means to assert hegemony in the Western Hemisphere. "The U.S. wants to maintain its privileged and hegemonic position within the Americas," he explained.

Challenges Ahead

While Trump aims for U.S. companies to dominate the global energy market by revitalizing Venezuelan oil production, some major U.S. oil firms remain hesitant.

Exxon CEO Darren Woods told Trump during a White House meeting on January 9, alongside other oil executives, that Venezuela would need to reform its laws before it could become an attractive investment opportunity. "If we look at the legal and commercial frameworks in place today in Venezuela, it's uninvestable," Woods said.

Analysts have voiced doubts about U.S. oil companies rushing to invest in Venezuela, given the uncertain political situation and the global oil supply glut. "You need political stability before companies will consider such investments," Daniel Sternoff, a senior fellow at Columbia University's Center on Global Energy Policy, told AP. "We have more questions than answers about Venezuela's future government."

U.S. Energy Secretary Chris Wright acknowledged that rebuilding Venezuela's oil infrastructure would take time. He added that increasing Venezuela's daily oil production to 3 million barrels could take 8 to 12 years.

Additionally, the increasing import of Venezuelan heavy oil is putting pressure on the survival of U.S. domestic oil companies. The Guardian recently reported that U.S. oil producers are already struggling with a global oil supply glut. In an article titled "U.S. frackers were already facing a global oil supply glut. Trump's Venezuelan dream could make it worse," the newspaper noted that U.S. companies are expected to experience their first production decline in four years by 2026.

Another critical factor is the International Energy Agency's push for the end of oil investment in its Net Zero by 2050 report. "There is no need for investment in new fossil fuel supply," the agency stated, further complicating the U.S. reliance on Venezuelan oil.