In another striking show of force, the U.S. military on Wednesday seized two sanctioned oil tankers on the open sea. This followed President Trump’s declaration late Tuesday that the U.S. would sell sanctioned Venezuelan oil. The oil gambit could be useful, though only if it advances the imperative of creating a free and prosperous Venezuela.
As we’ve written, deposing Nicolás Maduro was an act of hemispheric hygiene. But Mr. Trump’s incessant talk about monetizing Venezuela’s oil plays into the hands of critics who say it’s all about oil. The President in recent days has suggested subsidizing American oil companies to return to Venezuela, as if it’s an imperial American outpost from a century ago.
His plan to sell Venezuelan oil raises more questions. The government “will be turning over between 30 and 50 MILLION Barrels” for the U.S. to sell, and “that money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States!” he wrote on Truth Social.
Selling sanctioned oil could do some good if the proceeds are given to the opposition or put in an escrow account for rebuilding Venezuela’s economy, when and if the regime relinquishes power. But Mr. Trump seems to view the oil proceeds as a personal executive account, beyond the control of Congress’s purse-strings, to dole out as he sees fit.
It elides U.S. national security interests with Mr. Trump’s personal power, much like his gambit to let TikTok keep operating in the U.S. in violation of the law on the condition that the Treasury get a cut of its eventual sale to American investors. To the victor go the oil spoils won’t improve U.S. standing in the world, and it sends a bad message to the world’s rogues about the way to buy U.S. support. This will be reinforced if the oil donation helps the Caracas regime stay in power.
Energy Secretary Chris Wright suggested Wednesday that the Administration will use the oil money as a carrot with the regime. He said the U.S. first plans to sell crude that is backed up in storage because of the U.S. embargo. Then it will continue to sell Venezuelan supply and ease sanctions to boost production. “As we make progress with the government, we will enable the import of parts, equipment and services, to prevent the industry from collapsing, stabilize the production,” he said.
Venezuela has been relying on assistance from the Iranians and Chinese to prevent its aging oil infrastructure from collapsing. U.S. investment is preferable, but easing sanctions so American companies can operate in Venezuela won’t necessarily evict adversaries with their own strategic reasons for abetting the regime.
In any case, U.S. companies are unlikely to invest in Venezuela until a political transition creates stability and respects property rights. Oil investment is measured in decades, not the next three years. Merely maintaining current output will require billions of dollars a year, and a hundred billion or more to return production to the levels of the early 2010s.
U.S. companies have other attractive opportunities that carry less political risk, such as offshore Guyana where ExxonMobil and Chevron are making big investments. Harold Hamm’s Continental Resources is expanding in Argentina’s Vaca Muerta shale formation. Don’t forget America’s own resources, including in the Gulf of Mexico and Alaska. Mr. Trump may be able to coerce Chevron to invest more in Venezuela, or dangle subsidies as he has suggested, but this is dubious industrial policy.
The President’s oil gambit could turn out better than all of this suggests, and it’s good to see him still enforcing the embargo to maintain pressure on the regime. Wednesday’s seizures of a Russian-flagged tanker in the Atlantic and a shadow carrier near the Caribbean send a signal to the regime and America’s adversaries that the President is serious.
But Venezuela’s overflowing storage facilities are forcing wells to be shut in, raising the stakes for the regime. Mr. Trump’s plan to sell stored oil could provide a relief valve. We hope Mr. Trump understands that the success of his intervention won’t be measured in barrels of oil but in whether the country emerges as an American ally in a crucial region.
