Donald Trump has ordered a “total and complete” blockade of sanctioned oil tankers from Venezuela as part of an ongoing pressure campaign against president Nicolas Maduro’s government.
Hundreds of US troops and ships have been stationed near the Venezuelan coastline, where US forces last week seized an oil tanker in the latest attempt to inflict economic damage on Caracas.
In a post on Truth Social on Tuesday, Trump boasted that Venezuela was “completely surrounded by the largest Armada ever assembled in the History of South America”, warning that “it will only get bigger”.
He demanded that Venezuela “return to the United States of America all of the Oil, Land, and other Assets that they previously stole from us”.
Caracas described Trump’s announcement as a “grotesque threat”.
How big are Venezuela’s oil reserves?
Venezuela has control over the largest known oil reserve in the world, producing around 1 million barrels a day.
Its oil reserves are found primarily in the Orinoco Belt, a region in the country’s east which covers around 55,000 square kilometres.
The country’s proven reserves are estimated at more than 303 billion barrels, which is the largest reserve worldwide – trumping Saudi Arabia’s 297.7 barrels.
Venezuela’s crude oil reserves are six times larger than that of the US, which as of 2023 had 46 billion barrels.
In 2009, the United States Geological Survey estimated that the Orinoco Belt alone contains 900 to 1,400 billion barrels. Of this, it said between 380 and 652 billion barrels are recoverable.
The belt holds heavy crude oil, which is harder and more expensive to extract than conventional oil. Advanced technology is required to produce usable oil from this region.
Why doesn’t Venezuela export more oil?
Despite its natural resources, Venezuelan exports stood at just $4.05 billion in 2023, according to figures in the Observatory of Economic Complexity. This is a fraction of the $122 billion exported by Russia and $181 billion by Saudi Arabia the same year.
Venezuela’s state-owned oil company PDVSA sells most of its exports at a steep discount on the black market in China – because the country has been locked out of global oil markets due to US sanctions imposed by Trump.
Since the US imposed first energy sanctions on Venezuela in 2019, traders and refiners buying Venezuelan oil have resorted to using a “shadow fleet” of old tankers that disguise their location. They tend to have mysterious ownership and operate without standard insurance. Many have been sanctioned for transporting oil to Russia or Iran.
As of last week, more than 30 of the 80 ships in Venezuelan waters or approaching the country were under US sanctions, according to data compiled by TankerTrackers.com.
Last week, the US intercepted The Skipper vessel off Venezuela’s coast – the first time Washington has ever captured Venezuelan oil cargo since sanctions were imposed in 2019.
Where is the oil exported to and what routes are used?
Francisco Monaldi, a Venezuelan oil expert at Rice University in Houston, said that about 850,000 barrels of the 1 million daily production is exported. Around 80 per cent of that goes to China, 15 to 17 per cent goes to the US, and the remainder goes to Cuba.
Venezuelan oil is loaded at port terminals on its north Caribbean coast, such as the Puerto José.
Without a US blockade, Venezuelan ships have direct access to the Atlantic Ocean, from which they can travel through to South Africa, through the Indian Ocean and towards China.
Tankers travelling to the US will advance north through the Caribbean sea towards the Gulf of Mexico, before they are unloaded at US Gulf Coast ports including Pascagoula (Mississippi), St Charles (Louisiana), and Freeport (Texas).
Although the Trump administration has said The Skipper was heading for Cuba, analysts have said it was likely destined for China given its sheer size. The vessel, which is 20-years-old, can carry around 2 million barrels of oil.
Why does Trump want to block oil exports?
The Trump administration has been ramping up tensions with Venezuela in recent months, with growing signs that Trump is pushing for regime change.
The US military has recently carried out a series of military strikes on Venezuelan boats in international waters in the Caribbean and eastern Pacific that it claimed – without evidence – were carrying drugs to the US.
However, Trump’s chief of staff Susie Wiles appeared to suggest that ousting Maduro was also an aim for Trump in an interview with Vanity Fair.
Trump “wants to keep on blowing boats up until Maduro cries uncle”, Wiles said.
The amount of crude oil which Venezuela has been able to export to the US has since significantly dwindled and limited its access to international markets.
Regime change in Venezuela, in favour of a president more aligned with US interests, would provide Washington a much-increased access to Venezuelan crude oil, which is cheaper than crude oil from other countries due to its dense, viscous nature.
It could allow major US oil companies, including Chevron – which already produces oil in Venezuela – to expand its operations into the country. This would allow the US to reduce its reliance on oil from the Middle East or Russia.
It would also be a strategic win on the geopolitical stage, with Maduro currently allied with many of the US’ adversaries, including China, Iran and Russia.
