Oil extended losses on Wednesday after United States (US) president Donald Trump said Venezuela would turn over millions of barrels to the US.
Trump said on Tuesday that Venezuela’s interim government will deliver up to 50 million barrels of oil to the US, and that the proceeds “will be controlled by me” as president.
“The interim authorities in Venezuela will be turning over between 30 and 50 million barrels of high quality, sanctioned oil, to the United States,” Trump posted on his Truth Social platform.
“This oil will be sold at its market price, and that money will be controlled by me, as president of the United States, to ensure it is used to benefit the people of Venezuela and the United States.”
Crude has seen wild swings since the US president ordered the toppling Saturday of Nicolás Maduro, his counterpart in Caracas, and said Washington would run the country while demanding “total access” to its key resource.
But it sank as much as 2% on Tuesday and around 1% on Wednesday after Trump announced the latest development.
Analysts say the shipments lowered the risk that Caracas would have to cut output owing to its limited storage capacity, easing supply concerns, but add that the outlook for the commodity was lower prices.
That comes as the crude market remains well stocked after the Organisation of Petroleum Exporting Countries agreed to boost output.
Venezuela sits on about a fifth of the world’s oil reserves, but observers pointed out that a quick ramp-up of output would be hamstrung by several issues including its creaking infrastructure, low prices and political uncertainty.
–IOL News
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