Trump plans to refill U.S. Strategic Petroleum Reserve with Venezuelan crude

President Donald Trump said today, Sunday, that his country will use the oil it will receive under its new agreement with Venezuela to refill the Strategic Petroleum Reserve, which has fallen to near its lowest levels in more than four decades, at a time when the agreement gives Washington a direct financial stake in a massive oil project inside Venezuela.

The U.S. Strategic Petroleum Reserve stock reached about 290 million barrels as of August 21, approaching its lowest level in 44 years, after Washington had used a large portion of it in recent years to counter supply disruptions and rising fuel prices.

The agreement comes at a time when Venezuela's production is about 1.1 to 1.2 million barrels per day, after rising roughly 30% between January and July of the past two years, but it remains far below the 3 million barrels per day that the country produced about a quarter-century ago.

Shaneer Parker, partner at Restad Energy's energy research firm, said the agreement could give the United States long-term strategic reserves if it withstands future Venezuelan governments, but he pointed out ongoing uncertainty about how those reserves would be turned into actual production and who would finance their development.

The agreement also raised questions about its legal viability, given the Venezuelan constitution's provision that oil resources belong to the state and cannot be sold, while the current Caracas government insists the agreement preserves national sovereignty and does not involve selling reserves.

According to the Wall Street Journal, the Trump administration tried to persuade major U.S. oil companies, including Exxon Mobil and ConocoPhillips, to return to investing in Venezuela, but security and legal concerns and deteriorating infrastructure have caused many companies to hesitate.