US President Donald Trump said on Sunday that oil from his recently announced agreement with Venezuela would be used to rebuild the Strategic Petroleum Reserve (SPR), which has dropped to its lowest level in more than 40 years.
Trump said efforts to begin “topping out” the reserve would start soon, describing the Venezuelan crude as a “Gift from Venezuela to the People of the United States”.
He also blamed former President Joe Biden for the depleted stockpile, claiming the reserve had been “virtually emptied” during the previous administration.
The announcement directly connects Trump’s new Venezuela oil arrangement with efforts to restore the US emergency crude reserve, which has been heavily depleted by releases made amid wars, supply disruptions and attempts to keep fuel prices under control.
US crude holdings in the SPR fell to roughly 289.7 million barrels in August, the lowest level since November 1982, according to Department of Energy data.
WHAT IS TRUMP'S VENEZUELA OIL AGREEMENT?
On Friday, Trump announced an agreement that he said would provide the US with majority control over more than 65 billion barrels of Venezuela’s proven oil reserves through partnerships with private companies.
According to Trump, the arrangement would allow the US to gain access to a substantial portion of Venezuela’s oil reserves without requiring funding from American taxpayers.
Venezuelan interim President Delcy Rodriguez later said the energy agreement would remain in effect for 25 years and involve the development of 17 strategic oilfields, initially targeting production of more than 1.5 million barrels per day.
The broader proposal also covers eight greenfield oil blocks.
Rodriguez said Venezuela would continue to own and retain sovereignty over its natural resources while relying on foreign investment, technology and expertise to rebuild its oil sector.
Venezuela possesses the world’s largest proven oil reserves but currently produces only around 1.25 million barrels per day. Years of inadequate investment, mismanagement and sanctions have left production far below the country’s potential.
HOW SOON CAN VENEZUELAN OIL REPLENISH THE SPR?
Despite Trump’s announcement, there is still uncertainty over how quickly Venezuelan crude could actually be used to refill the SPR.
Trump has provided limited information about the agreement, including details about the specific oilfields and companies involved and the way the US would exercise majority control over the reserves.
Venezuela’s ageing oil infrastructure will also need substantial investment before production can increase significantly. Additional facilities and transportation capacity will be required to extract and move its heavy crude, meaning a large rise in output could take considerable time.
Venezuelan authorities are preparing to award new exploration and production rights to several companies, including US-based firms.
Chevron is among the companies expected to conclude negotiations to bring its existing Venezuelan joint ventures under the new framework.
Rodriguez has estimated that the agreement could eventually generate about $209 billion in revenue for Venezuela, assuming an oil price of $65 per barrel.
WHY IS THE US OIL RESERVE AT A 44-YEAR LOW?
Created following the 1973 Arab oil embargo, the Strategic Petroleum Reserve is the world’s largest emergency crude stockpile. Its purpose is to protect the US economy from major disruptions to oil supplies.
The SPR has a storage capacity of roughly 714 million barrels, but its current holdings have fallen to around 290 million barrels, leaving it at about 40 per cent of capacity after multiple withdrawals in recent years.
The most recent major release followed the US-Israel conflict with Iran, which pushed energy prices higher.
In March, the Trump administration announced plans to release 172 million barrels as part of a coordinated initiative with the International Energy Agency aimed at easing fuel-price pressures.
Some of the crude is being provided to energy companies as loans rather than being permanently sold. The companies are required to return the same amount of oil along with additional barrels as a premium.
Energy Secretary Chris Wright has said the arrangement could add between 35 million and 40 million barrels to the reserve by 2027.
Pressure on global oil markets has subsequently eased following a 60-day ceasefire between Washington and Tehran and the reopening of the Strait of Hormuz for energy shipments.
