{"id":372840,"date":"2026-01-16T07:16:09","date_gmt":"2026-01-16T07:16:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/372840\/"},"modified":"2026-01-16T07:16:09","modified_gmt":"2026-01-16T07:16:09","slug":"permian-basin-economy-slows-under-the-shadow-of-cheap-venezuelan-oil","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/372840\/","title":{"rendered":"Permian Basin Economy Slows Under the Shadow of Cheap Venezuelan Oil"},"content":{"rendered":"

The United States is rushing to sell off millions of barrels of Venezuelan oil after the Trump administration ousted and detained leader Nicholas Maduro on January 3. Trump has been extremely vocal of his plans to capitalize on Venezuela\u2019s oil reserves \u2013 the largest in the world \u2013 and build his \u201cvery own oil empire<\/a>\u201d capable of going toe-to-toe with OPEC.\u00a0<\/p>\n

Already, the United States Department of Energy is organizing the sale of about 50 million barrels of oil<\/a> that the United States seized from Venezuelan tankers that have been stranded since Trump imposed a partial blockade on the South American nation last month. \u201cThe first sale has already occurred and the sales will continue indefinitely,\u201d a spokesman for the Department of Energy said in a recent statement.<\/p>\n

Some supermajors<\/a> are already circling the warm Caribbean waters, eager to get a bite of Venezuela\u2019s drilling assets. Some experts contend that Venezuela\u2019s oil production levels could easily increase<\/a> by 50 percent without a large investment \u2013 the country has already produced more than 3.7 million barrels a day in its 1970s heyday \u2013 the precedent is there, and so is a lot of the infrastructure. But is the demand there?\u00a0<\/p>\n

<\/a><\/p>\n

Today\u2019s oil market is already saturated, faced with a persistent global oil glut<\/a>, and oil companies can\u2019t afford for prices to dip much lower than their current levels of around $60 per barrel. Production is already projected to exceed demand in 2026, thanks in large part to OPEC\u2019s reversal of production cuts over the last year, without even factoring in a Venezuelan oil renaissance.\u00a0<\/p>\n

Against this backdrop and from where U.S. shale producers are standing, a flood of cheap oil and gas onto the global market isn\u2019t going to make America great again \u2013 it\u2019s more of a nightmare scenario. The number of operating rigs in Texas oil country is already down nearly 15 percent this year as producers anxiously wait for prices to climb back up. As a result, the economy is already slowing down in a painful and tangible way across West Texas. \u201cIt has really cast a shadow over the Permian,\u201d Ben Shepperd, president of the trade group Permian Basin Petroleum Association, recently told<\/a> the Wall Street Journal.<\/p>\n

After the dramatic capture of Maduro earlier this month, Trump broadcasted that the U.S. would \u201crun the country<\/a>\u201d in order to control its oil resources. \u201cWe\u2019re in the oil business,\u201d Trump said. \u201cWe\u2019re going to have our very large United States oil companies [\u2026] go in, spend billions of dollars, fix the badly broken infrastructure, and start making money.\u201d<\/p>\n

But it\u2019s not clear that Big Oil actually wants in on this deal. \u201cInvestors don\u2019t care about energy dominance,\u201d Clayton Seigle, senior energy security at the Center for Strategic and International Studies, told a reporter for Semafor earlier this month<\/a>. \u201cThey care about energy dividends.\u201d And the fact is that dividends aren\u2019t aligning with Trump\u2019s petro-state policy.\u00a0<\/p>\n

\u201cTrump\u2019s dominance vision could undermine the free trade ethos that has helped the oil market function smoothly over the past several decades, to the benefit of US energy security,\u201d Semafor reported<\/a> on January 6. In fact, depending on how Trump approaches rebuilding Venezuela\u2019s ailing and infirm oil sector could hurt U.S. energy security far more than it helps it.\u00a0<\/p>\n

A recent Foreign Policy analysis<\/a> asserts that \u201ctoday\u2019s oil system is defined not by imperial control or even long-term bilateral contracts but by deep, liquid, transparent global markets supported by the dollar and a diversity of suppliers,\u201d and that this system has been enormously beneficial and strategic for the United States. \u201cTrump\u2019s rhetoric about \u2018controlling\u2019 Venezuelan oil misunderstands how power operates in the 21st-century oil system and risks undermining the very advantages the United States enjoys,\u201d the article goes on to argue.<\/p>\n

Meanwhile, for Venezuela, the revitalization of the oil industry could help the economy pull out of its death spiral \u2013 even if it also lines foreign pockets. \u201cRecent events have completely changed the economic outlook,\u201d Venezuelan economist Asdrubal Oliveros recently told the New York Times. \u201cOil production could fuel a real economic takeoff.\u201d<\/p>\n

By Haley Zaremba for Oilprice.com<\/a>\u00a0<\/p>\n

More Top Reads From Oilprice.com<\/p>\n

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