Trump Nationalizes Venezuelan Oil, Takes Direct Ownership, and Restores Sanctions and Loans

Trump Nationalizes Venezuelan Oil, Takes Direct Ownership, and Restores Sanctions and Loans

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The Trump administration has begun the process of seizing Venezuelan assets on behalf of multinational corporations, lifting economic sanctions that were imposed in retaliation for the socialist government's nationalizations 20 years ago, and restoring IMF loans.

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US Treasury Secretary Scott Bessent told Reuters on the 10th that additional sanctions on Venezuela could be lifted as early as next week to boost oil sales, and that he will also meet with the heads of the International Monetary Fund (IMF) and the World Bank next week to discuss renewing cooperation with Venezuela.

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In an interview, Bessent said that approximately $5 billion in frozen IMF Special Drawing Rights assets could be used to rebuild the country's economy.

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On the 9th, President Trump issued an executive order, stating that the proceeds from Venezuelan oil sales held in U.S. Treasury accounts were to be blocked from seizure by courts or creditors. The order stated that the money was "sovereign property of Venezuela, held by the United States for government and diplomatic purposes, and not subject to private claims," thereby declaring the United States the owner of the money through "custodial and operational rights."

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The day before signing the executive order, President Trump met with U.S. multinational oil companies at the White House and asked them about the extent of their "damaged assets" due to the Maduro regime's oil nationalization measures.

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He asked how much ConocoPhillips had lost in Venezuela.

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ConocoPhillips CEO Ryan Lance stated that his company owed $12 billion.

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President Trump responded, "Well, that's a good assessment."

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Reuters reported on the 11th that "several companies have long-standing claims against the country," adding that "ExxonMobil, ConocoPhillips, and others left Venezuela nearly 20 years ago after their assets were nationalized, and both still hold billions of dollars in debt."

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At a White House meeting, ConocoPhillips CEO Ryan Lance stated that the company was the largest non-sovereign credit holder in Venezuela. President Trump stated that "the U.S. government has a chance to recover what it lost," adding that "ConocoPhillips will recover a lot of the money, but the U.S. will start from scratch."

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Reuters then reported that Trump said, "What people have lost in the past is their fault, and we won't get involved." The White House then signed an executive order to prevent "creditors from seizing Venezuelan assets."

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The executive order ostensibly stated that these proceeds, held in foreign government deposits, should be used to "create peace, prosperity, and stability" in Venezuela.

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Treasury Secretary Besent then visited the Winnebago Industrial Engineering facility and said, "We are lifting sanctions on the oil that will be sold," referring to the proceeds from the sale of oil stored primarily on ships. He also addressed the Treasury's analysis of Venezuelan sanctions, saying, "How can we ensure that government returns to Venezuela to run the government, run the security apparatus, and deliver to the Venezuelan people?" Reuters reported.

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Besent's remarks appear to suggest that the seized Venezuelan funds could be used to "support a new security apparatus in Venezuela and establish a new governance system."

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Reuters reported, “These measures are part of the Trump administration’s efforts to stabilize Venezuela and encourage the return of U.S. oil producers a week after U.S. forces arrested Venezuelan leader Nicolás Maduro in Caracas and brought him to New York to face drug trafficking charges.” The report added, “U.S. sanctions prohibit international banks and other creditors from accessing the Venezuelan government without authorization, and they have identified this as an obstacle to a complex $150 billion debt restructuring widely seen as key to bringing private capital back to Venezuela.”

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The Trump administration’s new governance appears to involve lifting restrictions on loans and foreign currency exchanges by Treasury Secretary Bessent at the U.S.-controlled International Monetary Fund and World Bank.

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Reuters reported, “Both institutions have already contacted me about Venezuela,” adding, “The U.S. Treasury Secretary has said the U.S. Treasury will convert IMF special drawing rights held at the fund into dollars for use in Venezuela’s reconstruction.” He stated, "We are willing to do so."

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Venezuela currently holds approximately 3.59 billion Special Drawing Rights (SDRs), worth approximately $4.9 billion at the current exchange rate, but are currently inaccessible due to US sanctions.

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Venezuela's SDRs are comprised of the US dollar, euro, yen, sterling, and Chinese yuan, and the Trump administration initiated a "dollar exchange" for these currencies.

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The US Treasury Department agreed to provide $20 billion in exchange lines to Argentina, which attempted to overthrow its pro-US regime last year. Part of this support, along with the South American country's SDRs, was intended to stabilize the peso and support President Javier Millay's party in parliamentary elections.

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An IMF spokesperson told Reuters on the same day that the Fund was "closely monitoring the situation in Venezuela and declined to comment on Bescent's mention of a meeting next week."

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The IMF has had no contact with Venezuela for more than 20 years, and the country has been under a socialist regime since then. The last official assessment of Venezuela's economy was completed in 2004.

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Venezuela repaid its last World Bank loan in 2007, when Maduro's predecessor, Hugo Chavez, declared that Venezuela "no longer needed to ask Washington for funds," effectively cutting off its access to Western economic resources.

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President Trump's executive order prohibiting courts from seizing Venezuelan oil revenues states that they must be used to "create peace, prosperity, and stability in Venezuela." The order was signed and implemented less than a week after U.S. forces arrested Venezuelan President Maduro in Caracas late at night.

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The meeting at the White House on the 9th included President Trump, Secretary of Oil Wright, Secretary of State Marco Rubio, Secretary of the Interior Doug Burgum, and 17 major corporations: ConocoPhillips, Exxon XOM, Chevron, Spain's Repsol, and trading company Vitol. Trafiguraga and others attended.

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White House Press Secretary Taylor Rogers responded, "The American people, energy companies, and the Venezuelan people will all benefit greatly from this unprecedented new investment in Venezuela's oil infrastructure, thanks to President Trump."

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While oil multinational Chevron still operates in Venezuela, Exxon and Conoco pulled out nearly two decades ago after their assets were nationalized and hold billions of dollars in bonds.

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Jeffrey Pyatt, a former Assistant Secretary of State for Energy Resources in the Biden administration, told Reuters, "The tension is between powerful geological resources and clear business opportunities, and significant ground risks, uncertainties, and unpaid claims."