The US has $13bn in Venezuelan oil money. Where is it?

0:02Good morning from the Financial Times. Today is Wednesday, July 22nd. And this is your FT News Briefing. There's been a shakeup in Ukraine, and the U.S. has raked in billions from Venezuelan oil, but where's it going? Plus, investors are torn over how to handle Japanese bonds. I'm Mark Filipino, and here's the news you need to start your day.

0:37Volodymyr Zelensky is replacing his wartime commander-in-chief. The Ukrainian president dismissed Alexander Siersky after days of protests. He has led the country's forces since 2024. The move signals a generational shift in the Ukrainian military, and it comes as Zelensky tries to restore the public's trust in his wartime leadership. Zelensky named the much younger Mihailo Drapati as his successor instead. Demonstrations began last week after Zelensky fired his popular defense minister, Mihailo Fedorov. He was credited with turning the tide in the war by using drones, but he's also said to have clashed with the outgoing Searski.

1:20After U.S. forces captured Venezuelan President Nicolas Maduro in January, the Trump administration made a lot of changes, namely installing Delcio Rodriguez as the country's leader, suspending some sanctions and importantly taking control of Venezuela's oil exports. And since then, the Trump administration has cashed in more than$13 billion in revenue from Venezuelan oil sales. That's according to FT calculations. But there's no word on where the money is going. Here to discuss is the FT's Latin America editor, Jeff Dyer. He broke the story. Hi, Jeff. Hi, how are you doing? I'm doing well. So when President Trump took over Venezuelan oil, how are those revenues supposed to be used?

2:01Well, it's never been explicitly explained, but what happened after that military operation when Nicolas Maduro was seized was that the U.S. opened up sanctions allowing Venezuela to sell its oil openly on the market, but that that money had to be routed through U.S. government bank accounts in New York. There's data available for the amount of oil that has been exported from Venezuela since the start of the year, and there's also data available on the pricing for quite a lot of that oil. So we put together those two variables and made a rough estimate and came up with this number of at least$13 billion since the beginning of January.

2:35And how much of that$13 billion is getting back to Venezuela's economy? So this we don't know. Now, what we do know is that in March, the Venezuelan government said a$300 million payment had been made. But that's the only information we got from Venezuela. We also know that earlier this year, a State Department official said that$3 billion had been sent. This was in April, he said this. But beyond that, we don't know exactly how much money has been sent. Because this is in a way that, you know, if you think about the relationship, it's almost like a neocolonial relationship in some people's view that the U.S.

3:06has established with Venezuela. It's trying to control the Venezuelan government without actually putting in any soldiers or any troops on the ground. And the way that it is doing that is by controlling the oil revenues. Given how opaque this is, do we have a sense of what this is doing to Venezuela's economy? So you have to remember with Venezuela, this is a country which is heavily dependent on its oil industry, as much as between 20 and 25 % of GDP comes from oil exports. Now, economists had thought there would be a big uptick in the Venezuelan economy this year, because if you think about under sanctions, they were able to sell their oil, but they had to sell it at a huge discount.

3:41So given that it's now selling its oil at full price, economists had expected there'd be a big uptick in the Venezuelan economy so far this year. But the figures so far do not suggest that that is happening. And so that has led a lot of economists to think that the U.S. administration has not been sending back the full total of the oil revenues this year. And this revenue would probably come in handy right now because the country just faced two devastating earthquakes that killed over 5 ,000 people. It's now facing a huge rebuild. The U.N. has estimated that the bill for just rebuilding the infrastructure is going to cost something like$37 million.

4:16So this is a huge rebuilding effort. It needs all the money it can get. Jeff, do you have a sense of what might happen next with the money that the U.S. is going to continue to collect from Venezuelan oil sales? Like, what are you watching out for? Well, one thing that people are looking at is what happens in the midterm elections in the U.S. If the Democrats win control of one of the houses of Congress, it is possible that Venezuela will become the subject of subpoenas and hearings. There's also some pressure from Republican members of Congress as well over this. There are several Republicans in South Florida who have very large Venezuelan populations in their constituencies.

4:49So there's political pressure on the administration, not just from the Democrats, but also from a member of his own party to say more about how much is going back and what they're doing with it. A lot to keep an eye out for. Jeff Dyer is the FT's Latin America editor. Thanks so much, Jeff. My pleasure.

5:07On Monday, U.S. President Donald Trump unveiled a 50 percent tax on many Canadian goods and more tariffs could come at any moment. The FT's trade reporter in Washington, Amy Williams, says a key deadline is coming up that's forcing Trump to act. So Trump's original so-called Liberation Day tariffs was struck down by the U.S. Supreme Court. They quickly pivoted to a different trade law, which is known as Section 122, and that allows the president to impose tariffs for only 150 days. But their 150 days will lapse on Friday. In the meantime, Amy says the Trump administration has been laying the groundwork for using a law on forced labor to justify the tariffs.

5:52They've launched a big investigation. They launched it months ago into forced labor practices in all these different countries. So it would be quite easy for them to conclude that investigation and impose tariffs of between 10 % and 12 % on a lot of countries by the end of the week. So that would effectively roll over 10 % tariffs on a lot of countries and create some continuity. But aside from that, we've had a couple of curveballs, including when the administration announced that it would use another quite novel trade law to impose really quite high tariffs of 50 percent on about$20 billion worth of Canadian goods.

6:35But the administration's move could create a lot of confusion. They'd potentially need to give their customs and border officials some time to implement the tariffs. But they have previously given them really not very much time at all to deal with this stuff. So they really could leave it till quite late this week if they wanted. Amy Williams covers trade for the FT out of Washington.

7:03Samsung is betting big on Europe's most valuable AI startup. The South Korean conglomerate is in talks to invest around a billion euros in the French company Mistral. Many AI developers are shifting their sights toward Europe and Asia for alternatives to U.S. tech. That's after the Trump administration blocked foreign access to two of Anthropix models last month. Mistral and Samsung both declined to comment for this story.

7:32foreign investors have some big reservations about the japanese bond market the yields on japanese government bonds have climbed to their highest point in decades this is attracting some new investment but many asset managers are still moving with caution here to break things down is the ft senior markets correspondent ian smith hi ian hi there can you bring us up to speed what's behind the recent spike in Japanese bond yields. Yeah, so there's been a relentless sell-off in Japanese government bond markets over the past year that has pushed yields to their highest levels this century, seeing the 10-year yield climb above 2.5 percent, the 30-year yield climb close to 4 percent.

8:09Those rising yields mean falling prices. And what's happening there is that rising interest rates, concerns over inflation, and a big government spending package are forcing investors to demand more to lend to the government over the longer term. Ian, why wouldn't investors want to jump on the higher yields though? Wouldn't that be a good thing for them? So now with that higher level of starting yield, you're seeing some investors thinking of allocating more to Japanese government bonds or to cool a top in those rising yields. But as you say, they are hesitant to do so. We are seeing some start to dip their toe back into the market.

8:44So with long positions falling back a little bit, thinking that a repatriation of capital to Japanese pension funds might help with the supply, demand, and balance in the market, but they are nervous about taking big bets. And the thing is, this is a market where there has been a history of failed attempts to trade the market by international investors, which is leaving them very cautious. Yeah, so investors have been burned by Japanese bonds before. You've actually written about something called the widow-maker trade. What is that? So for years, any attempts to bet on a move higher in Japanese government bond yields was confounded by the country's negative interest rates and vast bond buying by its central bank, which really kept those yields pinned.

9:23It was called the widow-maker trade for the losses that it stuck investors with. Now people worry that the inverse is the case, that if you stand in the way of this sell-off in Japanese government bonds, if you really bet that yields are going to fall, then you're going to get run over by the sell-off and that the reasons that are pushing yields higher are relentless and will leave you with a loss-making position. So what would need to happen in order to see a rally? The reasons to hope for a rally in the bonds might be that Japanese pension funds and life insurance companies are more likely at this higher interest rate in domestic debt to move more of their vast amount of money back from overseas.

10:01That might provide a bit of an anchor in the market. Or if you think that the Bank of Japan might get more serious in talking about inflation and shift hawkishly in a way that reassures people about long-run inflation. You might see, and some investors are looking for this, the government moderating its longer-term spending plans, showing acknowledgement of the rise in market borrowing costs. If that happens, you could see bonds rally as some of the fiscal risks come out of the price. Ian Smith is the FT Senior Markets Correspondent. Thanks, Ian. Thank you.

10:37You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News briefing. Check back tomorrow for the latest business news.

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