The U.S. is interested in Venezuelan oil, but that's not all

0:00Tensions between Venezuela and the U.S. have been growing and growing in recent months. And last Wednesday, the pressure point was oil. As you probably know, we've just seized a tanker on the coast of Venezuela. A large tanker, very large. Largest one ever seized, actually. The U.S. government says the tanker was filled with illegal oil headed to the black market in violation of sanctions. Well, we keep it, I guess. The seizure was an unprecedented move, and it represents an escalation in the standoff between the two countries. In recent months, the U.S. has struck nearly two dozen suspected drug boats in nearby waters, issued new sanctions targeting Venezuela, and increased its naval presence in the Caribbean.

0:44Trump says this conflict is in part because of immigration to the U.S. Well, it's about a lot of things, but one of the things it's about is the fact that they've allowed millions of people to come into our country from their prisons, from gangs, from drug dealers, and from mental institutions, probably proportionately more than anybody else. Meanwhile, Venezuela's leader, Nicolas Maduro, says the U.S. is only interested in his country's oil reserves. Because yesterday they did an absolutely criminal and illegal when they proceeded to an military assault, murder and murder as pirates of the Caribbean.

1:26Last Thursday, he compared the seizure of the tanker to pirates of the Caribbean, saying the U.S. acted criminally and illegally. Consider this. The U.S. has long had economic and political interests in Venezuela, and the oil industry of the South American nation has been a key part of that relationship. From NPR, I'm Scott Detrow.

1:56It's Consider This from NPR. Venezuela has one of the biggest oil reserves in the world, and its regime has been accused of relying on illicit tankers like the one the U.S. seized last week to get around sanctions. The goal? To smuggle crude oil into global supply chains. But how did we get to this point? To help us break that down, we called Francisco Monaldi. He's the director of the Latin American Energy Program at the Baker Institute at Rice University. Thanks for talking to us. Thank you for inviting me. In terms of U.S. troops, you know, sliding down ropes from helicopters to seize an oil tanker, have you ever seen anything like this before?

2:34It's something that has not happened in the case of Venezuela. There have been other events related to sanctioned Iranian vessels. But this is unprecedented in that it's the first time that the U.S. sort of is signaling a blockade, meaning that the tankers coming out of Venezuela are potentially going to be subject to seizures in the future. Let's rewind way back, zoom way out in terms of the context we're talking about this. Historically, what's the best way to think about why and how much the U.S. has focused in on Venezuela's oil production? Well, the U.S. companies have been a major player in Venezuela since a century ago when oil production started.

3:22There was a brief period when nationalization happened in the oil industry of Venezuela between 1975 and the early 90s, in which the oil companies were not there. But then they came back, particularly Exxon, Conoco, and Chevron. But then there was a renationalization by Hugo Chavez, and only Chevron remains. But it's a very big player in Venezuela, producing about 25 % of Venezuela's exports. And yet Venezuela has one of the biggest oil reserves in the world, but is a relatively small producer compared to the oil it has. Is that just because of the way that it was economically isolated post-nationalization, or what's going on there?

4:07It's a combination of things. The dominant player still is the national oil company, and the national oil company has been mismanaged, and there has been too much extraction of resources from the oil company to the government and reneging on the deals with international companies. And as a result, the production has declined in the last 25 years from around 3.6 million barrels to about a million barrels today. Of course, U.S. sanctions starting in 2020 did also affect the oil industry. So if the U.S. follows through and continues to crack down on these black market shipments, How much do you think that affects Venezuela's economy, which, as we know, is already in a terrible place?

4:55Well, it could produce first a decline on the price that Venezuela gets because they will have to offer very significant discounts for anyone to take the risks. In addition, of course, the volumes, if a significant number of tankers are not willing to go to Venezuela to load oil. And that could produce a significant decline in revenues and then in GDP, like the one that Venezuela had in 2020 when sanctions were increased and COVID led to a massive decline in production to less than half of what it is today. And that will, of course, have a significant impact in everything related to the economy, including an increase in inflation and a deteriorating income for Venezuelans.

5:49You know, we've been talking about the energy industry specifically here, but just kind of big picture thinking about the tension between the U.S. and Venezuela right now. This is about alleged drug trafficking. This is about election improprieties and the Maduro government, you know, ignoring widespread viewed as an election loss from from from international observers. All of those things have been going on for a while now. Why do you think there's such a focus on Venezuela right now coming from the Trump administration? It seems to me that the policy is being driven by Secretary Marco Rubio, who has for a long time thought that Venezuela and Cuba are nefarious actors against U.S.

6:33interests. And the drug issue and the crime issue and the immigration issue sort of have been a way to align his views with others in the administration to really focus on producing a change in government that, you know, Nicolás Maduro lifts power. And so they want to do it without the need to, you know, put boots on the ground or, if possible, just by putting a credible threat on what they might do in Venezuela. And, of course, this oil side seems to be part of that pressure campaign to get Maduro out without having to pay any significant cost on the U.S. side. That is Francisco Minaldi, director of the Latin American Energy Program at the Baker Institute at Rice University.

7:27Thanks so much for talking to us. Thank you. This episode was produced by Ava Berger and Alejandra Marquez-Hanzi. It was edited by Sarah Handel. Our executive producer is Sammy Yannigan. It's Consider This from NPR. I'm Scott Detrow.