The US plans to use its newfound assertion of control over billions of barrels of Venezuelan crude oil to refill the nation’s depleted emergency reserve, President Donald Trump said Sunday.
“One of the things I am going to do with the Venezuelan Oil is fill up the Strategic National Reserves,” Trump said in a Truth Social post, in which be blamed Joe Biden, his predecessor as president, for emptying the reserve.
“The ‘topping out’ process will begin very shortly, and is a Gift from Venezuela to the People of the United States,” Trump said.
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The more than 700 million-barrel Strategic Petroleum Reserve currently holds 289.7 million barrels of oil, or roughly 40% of its capacity, following massive drawdowns by both Trump and Biden.
Trump said Friday that the US was taking control of 65 billion barrels of Venezuela’s proven reserves in partnership with private businesses. US officials said the plan would create the world’s second-largest private oil company by reserves and secure American petroleum supplies for decades to come.
The US will control 55% of the effective output from the joint venture and will obtain the oil at cost, according to a US official.
It’s unclear how quickly Venezuelan production can grow amid degraded existing infrastructure, unreliable electricity and legacy environmental liabilities.
Companies including Chevron Corp. are in talks to expand operations in Venezuela, Bloomberg previously reported, and Eni SpA has said it’s working with Venezuelan authorities to help revive production as well.
Trump hasn’t provided more details on how the arrangement might work and the US Energy Department didn’t immediately respond to a request for comment.
Analysts have said the high-sulfur sour crude produced in Venezuela’s Orinoco Belt region makes it logistically challenging to be pumped into the underground salt domes that comprise the US reserve.
The Energy Department in January denied a report it was considering a plan to deliver Venezuelan crude to US refineries in exchange for US crude to refill the reserve, saying it was “not currently considering” the concept.
The US has struggled to refill its massive reserve created in the aftermath of the Arab oil embargo in the 1970s, in part of because Congress has been reluctant to provide the required billions of dollars in funding.
“The White House might find it more viable politically to sell Venezuelan barrels and use the proceeds to purchase U.S. crude for at least some of the volumes it contemplates acquiring for the Strategic Petroleum Reserve,” ClearView Energy Partners, a Washington consulting firm, wrote in a research note.
The massive reserve sits at its lowest level in more than four decades, as the US follows through with a plan to release 172 million barrels from the oil cache in conjunction with other nations announced in March after the start of the Iran war.
Biden’s administration withdrew hundreds of million of barrels as well through a series of releases including including after Russia’s invasion of Ukraine.
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