Trump turns Venezuelan oil into political weapon

Venezuelan oil supply is becoming “politically elastic” with volumes now dependent on US electoral and foreign-policy dynamics, adding a new layer of volatility, warns the CEO of global financial advisory giant deVere Group.

The warning from Nigel Green comes as the first US-authorized sale of Venezuelan crude was to a company whose senior oil trader donated to Donald Trump’s re-election campaign and attended a White House meeting with the president last week.

Venezuelan oil policy now sits squarely within the US administration.

John Addison, a senior trader at Vitol who has given about $6mn to political action committees backing Trump’s re-election effort, played a central role in securing his company’s $250mn deal for Venezuelan crude.

The transaction triggered the president’s controversial plan to release up to 50mn barrels of Venezuelan oil onto the market.

Nigel Green says: “Oil traders can’t easily price political elasticity. It turns barrels into a policy instrument. Supply can now expand or contract on the back of decisions taken in Washington, and markets have to charge for that uncertainty.”

He adds: “The US now exercises decisive influence through authorizations, counterparties, and the financial and logistical permissions that determine where crude can be sold.

“Market access has become the lever of power, and risk premiums rise when that lever is political.”

Venezuela holds the world’s largest proven oil reserves, yet production remains far below potential after years of underinvestment and sanctions.

Recent policy shifts allow oil to move again, but under conditions shaped by US political priorities rather than long-term sector strategy.

“Investment in Venezuela’s energy future is now being channelled through US policy decisions,” explains the deVere CEO.

“This means producers lose autonomy, some traders gain influence, and the structure of the market changes in ways that undermine stability.”

Venezuelan crude is heavy and sour, suited to specific refinery configurations, particularly along the US Gulf Coast.

When supply becomes contingent on politics, refiners face planning risk that goes well beyond price swings. A single policy shift can force rapid changes in crude slates, raise procurement costs, and squeeze margins across fuels and petrochemical feedstocks.

Nigel Green continues: “When Venezuelan supply could appear, disappear, or reroute at political speed, it reshapes differentials, freight rates, and refinery economics far beyond Latin America.

“The distortion could spread through the entire energy complex.

“Markets cope with disruption when rules stay consistent. They struggle when supply is tied to political calendars and strategic signalling.

“Hedging becomes harder, volatility becomes structural, and uncertainty could embed itself into pricing.”

The consequences extend well beyond energy desks. Higher and more erratic oil prices tighten financial conditions for importing nations, worsen trade balances, and place pressure on currencies. In emerging markets, that combination lifts risk premia and reduces capital flows at the margin.

“Energy remains the world economy’s most important input,” says the CEO.

“When oil volatility rises, inflation risks rise, growth assumptions weaken, and central policy choices become more constrained. The spillover can hit equities, credit and foreign exchange at the same time.”

Shipping and insurance add another transmission channel. Politically sensitive trade routes and rapidly changing counterparties can drive sudden moves in freight and cover costs, pushing delivered crude prices higher even when headline supply appears adequate.

Nigel Green concludes: “Venezuelan oil now appears to be a Washington-based, political-influence story.

“The significance lies in the fact that political volatility in energy can become volatility across the entire financial system.”

The post Trump turns Venezuelan oil into political weapon appeared first on USNewsRank.