For a White House pursuing “energy dominance,” President Trump’s play for Venezuela’s oil holds considerable promise.
Having effective control of Venezuela’s oil exports could expand the United States’ ability to project power around the world without worrying as much about the economic and political consequences of oil price shocks. It could reduce the influence of Middle Eastern oil producers and leave big consumers like China more dependent on the United States.
The head of Russia’s sovereign wealth fund, Kirill Dmitriev, said that Washington could now have “huge market leverage” in the global oil trade. Tong Zhao, a China analyst at the Carnegie Endowment for International Peace, said there was concern in Beijing that expanding U.S. influence across Latin America could “enable the United States to cut off oil and other strategic resource supplies from the region to China at will.”
But Mr. Trump’s grand plans for Venezuelan oil have already run headlong into reality, starting with the apparent reluctance of the major American oil companies to plunge immediately into Venezuela and the related fact that, unlike Russia or Saudi Arabia, the United States does not have a national oil company ready to do the government’s bidding. And he is waging his campaign for greater control of world oil markets in an era in which the United States is already less sensitive to shocks in the global oil supply than it was in decades past, when Mr. Trump honed his “take the oil” mentality.
Venezuela has the world’s largest oil reserves, but currently produces only about 1 percent of the world’s oil because of years of sanctions and mismanagement. Mr. Trump has said that American companies will spend billions of dollars to improve the country’s infrastructure and increase its production — a process that analysts believe would take years.
Mr. Trump’s strategy raises the question of how much “energy dominance” is really worth nowadays, given that many analysts believe that a vast oversupply of oil is already sloshing around global markets.
“Under Trump, the U.S. status as the world’s largest petrostate is growing,” said Cliff Kupchan, chairman of the Eurasia Group, a political risk assessment firm. “In my view, it’s a bad bet.”
Mr. Trump, however, is projecting confidence.
“We are open for business,” Mr. Trump said as he hosted oil executives at the White House on Friday, speaking as though he was already in charge of Venezuela’s oil exports.
Moments later, the chief executive of the largest U.S. oil company, Exxon Mobil, told Mr. Trump that Venezuela was “uninvestable” and did not commit to major spending. On Sunday, Mr. Trump told reporters aboard Air Force One that the U.S. oil giant was “playing too cute.”
“I’d probably be inclined to keep Exxon out” of Venezuela, Mr. Trump said. “I didn’t like their response.”
It was a back-and-forth that demonstrated Mr. Trump’s fixation on oil as the spoils of the United States’ attack on Venezuela and seizure of its leader, Nicolás Maduro, on Jan. 3. It also revealed the limits of his influence as the American president, in a world in which energy companies are far from eager to see even more fossil fuels on world markets. The U.S. benchmark oil price traded near $56 a barrel last week, close to its lowest level in five years.
“1973 is long gone,” said Amy Myers Jaffe, an energy and geopolitics scholar at New York University. “Oil is not our Achilles’ heel anymore.”
Ms. Jaffe was referring to the 1973 oil embargo, when Arab oil exporting countries punished the United States for its support of Israel and, in so doing, demonstrated the vulnerabilities of relying on foreign oil imports. Not only is the United States now the world’s largest oil producer, she said, but “much of our economy runs on other energy sources.”
Yet the view of oil as a driving force in geopolitics has been fixed in Mr. Trump’s mind since at least the 1980s. He touched on the 1973 oil crisis in his 1987 “Art of the Deal,” noting in the book that the oil embargo “devastated” U.S. airlines. After he returned to the White House last year, Mr. Trump announced the formation of a National Energy Dominance Council with the goal of reducing “our dependency on foreign imports.”
Mr. Trump’s attack on Venezuela has emerged as a unique opportunity to put into action what he has long called for: taking another country’s oil.
“They’re going to be going in with hundreds of billions of dollars in drilling oil, and it’s good for Venezuela and it’s great for the United States,” Mr. Trump said after meeting oil executives on Friday, without clarifying which companies would be making those investments and doing the drilling.
On paper, at least, having some measure of control over Venezuelan oil exports could indeed provide Mr. Trump with additional international leverage. Meghan L. O’Sullivan, director of the Geopolitics of Energy Project at the Harvard Kennedy School, said one result could be a decrease in the influence of the OPEC oil cartel and of “U.S. adversaries that might seek to influence oil markets.”
Mr. Zhao, the Carnegie China analyst, said that Beijing appeared to be nervous about the increasing U.S. role in oil markets, even more so because of instability in Iran. While only about 5 percent of China’s total crude oil imports come from Venezuela, he said, Venezuela could become more important as a source “should China’s access to Iranian oil come under pressure.”
As Mr. Trump considers yet another potential foreign military intervention — this time in Iran — the role of oil in geopolitics could become relevant again. Ms. O’Sullivan, who served in the George W. Bush administration during the Iraq war, said that Mr. Trump was less constrained by the threat of oil prices spiking as a result of military action in the Middle East than past presidents might have been.
But, she said, Mr. Trump could still be challenged by Gulf oil producers like Saudi Arabia that are in need of higher oil prices.
“They may not feel inclined to pump more oil to ensure low gas prices for the American consumer if Trump’s actions lead to further unrest,” Ms. O’Sullivan said in an email.
Mr. Kupchan, the Eurasia Group chairman, predicted that Mr. Trump could soon voice an interest in Iran’s oil, as well. He said the focus on oil appeared to be distracting the Trump administration from the need to make the United States more competitive in selling cutting-edge, electricity-based technologies to the world, an arena in which China excels.
“Trump’s not wrong that there’s some leverage to be derived from Venezuelan, Iranian oil,” Mr. Kupchan said. “What’s important, though, is that the trade-off is really severe.”
Anton Troianovski writes about American foreign policy and national security for The Times from Washington. He was previously a foreign correspondent based in Moscow and Berlin.
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