Venezuela has just handed over $65 billion worth of oil rights to the U.S., yet simultaneously told China, 'Existing contracts remain unchanged': So how will it repay the tens of billions of dollars owed?

I’m not sure whether this question falls under economics, but let me explain the actual situation. First, Venezuela isn’t ‘handing over’ oil rights to the U.S.—it’s *reinstating* them. Under Chávez and Maduro, the Venezuelan government expropriated vast assets belonging to U.S. oil companies operating in Venezuela. Those companies filed claims internationally, and arbitration tribunals ruled that Venezuela must pay compensation—but the Venezuelan government refused to comply. Now, the U.S. and Venezuela have reached an agreement that makes no mention of compensation. Why? Because the oil industry assets are being returned to U.S. companies; the expectation is that future revenues will offset past losses—effectively wiping the slate clean. Second, revenue from oil sales must be deposited into accounts supervised by the U.S. Many people, swept up by emotion, simply don’t understand the reality. Venezuela owes compensation not only to U.S. firms but also to enterprises from multiple other countries—and it owes money to several nations outright. Right now, Venezuela has virtually no economic lifeline. It cannot engage in drug trafficking. And if oil revenues are forcibly seized to settle debts and compensation claims, what will sustain Venezuela? In fact, when Venezuela was first permitted to resume oil exports, Trump declared a national emergency precisely to shield Venezuelan funds held in U.S. accounts from judicial seizure—a move reported by CCTV. So before criticizing me, remember: CCTV covered it. Moreover, the U.S. has its own strategic calculations. It lifted sanctions on Venezuela to allow it to earn money and conduct business—but remains uncertain whether Venezuela has genuinely reformed. If Venezuela uses newly earned revenues to purchase large quantities of weapons or expand drug-trafficking operations, continuing its confrontation with the U.S., then lifting sanctions would be meaningless.

What exactly is happening in Venezuela?

Moreover, due to U.S. sanctions, Venezuela has been unable to update or maintain its oil extraction equipment—causing its oil production to plummet dramatically. To preserve its grip on power, Maduro resorted to policies defying basic economic principles: For instance, to ensure citizens could afford food, Maduro mandated that essential goods—including bread and milk—be sold at artificially low prices (even below cost). The result? Businesses incurred losses, shut down en masse, or stopped importing goods altogether—triggering severe shortages. When falling oil prices reduced state revenues and left the government unable to fund its generous welfare programs, Maduro chose the simplest solution: printing money. This triggered hyperinflation, rendering the national currency virtually worthless. The government also banned private foreign-currency exchange. With the official exchange rate wildly diverging from the black-market rate, massive corruption flourished: elites exploited the official rate to buy U.S. dollars, then resold them on the black market for profit—while simultaneously crippling import-export trade. At this juncture, the U.S. seized the opportunity and imposed what became history’s harshest sanctions. In 2017 and 2019, the Trump administration issued executive orders cutting off the Venezuelan government and its state-owned oil company, PDVSA, from international financial markets. This meant Venezuela sat atop enormous oil reserves yet couldn’t monetize them—or borrow money. Simultaneously, the U.S. froze all Venezuelan assets within its jurisdiction. The most prominent case involved Citgo Petroleum Corporation—valued at tens of billions of dollars—seized outright by the U.S. and handed over to opposition leader Juan Guaidó to spend as he saw fit. Even Venezuela’s 31 tons of gold stored at the Bank of England were seized by the British government. Amid such internal turmoil and external pressure, Venezuela’s economy collapsed. 86% of its population lives in poverty; 85% of businesses have ceased operations; its 2024 GDP stood at just $82.7 billion—only 22% of its 2012 level; per capita income fell to $2,427; and public debt soared to $164 billion. In this top global oil-producing nation, ordinary citizens struggle to put food on the table. Venezuela refused to accept this fate passively. To strengthen its bargaining position and compel the U.S. to ease sanctions, it turned its attention toward neighboring Guyana’s oil-rich Essequibo region—militarily posturing and declaring its intention to establish the area as Venezuela’s ‘Essequibo State’! But here’s the catch: exploration and production rights in the Essequibo region belong to ExxonMobil. Thus, once Trump returned to office—as de facto representative of U.S. petroleum interests—the clash between Trump and Maduro became inevitable. Accordingly, Trump swiftly branded Venezuela a narcotics hub, escalating military pressure. Yet the irony is stark: even if Venezuela produces drugs, it mainly cultivates coca—yielding cocaine—not the synthetic opioids flooding the U.S. market. Among global sources of U.S. illicit drugs, Venezuela likely doesn’t even rank among the top ten. Nonetheless, the U.S. pressed ahead—accusing Maduro himself of leading Venezuela’s ‘Sun Cartel’ and flooding America with narcotics. Washington declared it would wage a full-scale ‘war on drugs.’ Starting in September, the U.S. launched Operation ‘Southern Spear,’ preparing for military action against Venezuela. Of course, during these months—even as the U.S. sank Venezuelan fishing vessels—diplomatic channels remained open. Trump demanded Maduro’s resignation and offered him a safe exit route.

US-Held Venezuela Oil Fund Used $9 Billion to Buoy Bolivar

1 day ago

A US State Department report reveals $12.1 billion was disbursed from a US-held Venezuelan oil fund, with $9.32 billion used for foreign-exchange interventions to stabilize the bolivar. Oil revenues comprised nearly 99% of the account deposits during the period.

bloomberg

US-Held Venezuela Oil Fund Used $9 Billion to Buoy Bolivar

FAQ