Has Trump's Venezuelan oil grab fallen flat? A bold move, but one that may not pay off as expected.
The recent US intervention in Venezuela has sparked intense debate, with many questioning America's sudden disregard for national sovereignty. But here's where it gets controversial: it's all about oil, just like the first Gulf War.
Back in the late 1980s, George Bush Sr. led a massive UN force into Kuwait to defend against Saddam Hussein's invasion. Ostensibly, it was about sovereignty, but the real motive was oil.
Last weekend, Donald Trump followed a similar path, justifying the capture of Nicolás Maduro by claiming Venezuela posed a threat to US security. While the legality and potential fallout are hotly debated, there's a quiet consensus: it's all about oil again.
Trump hasn't helped his case. He's boasted about his military operation and the riches he expects from Venezuela, even claiming personal control over the country's oil wealth. He announced that Venezuela's interim leaders would hand over 30 to 50 million barrels, which the US would sell at market rates.
"That money will be controlled by me!" he exclaimed, setting a clear tone: America aims to be the global energy powerhouse, controlling energy prices worldwide.
But scratch beneath the surface, and Trump's plan may not be as lucrative as he thinks.
Venezuela's oil reserves, often touted as the world's largest, are not what they seem. The country's oil infrastructure is in disarray, producing only a fraction of its former capacity. Its oil is heavy, difficult to refine, and loaded with sulfur, making it costly to extract. Only a few specialized refineries can process it.
Even the proven reserve figure of 303 billion barrels is questionable. Proven reserves are not static; they change with oil prices and technology. When the price was $140 per barrel in 2008, those reserves looked promising. Now, with prices under $60 and the US producing more oil than ever, the picture is different.
According to Adi Imsirovic, an energy systems expert, the current proven reserves may be well below 100 billion barrels, less than a third of the commonly cited figure.
And that's not all. The demand for oil is set to slow and then crash. While oil is essential for many products, its primary value is as fuel, and here, the writing is on the wall.
The world's biggest car manufacturers are shifting away from internal combustion engines to electric and hybrid vehicles. While the transition may be slower than expected, it's happening, led by China. This will result in a drastic drop in oil demand, creating an even bigger glut.
A study by Bloomberg New Energy Finance predicts that electric vehicles will slash demand for petrol by 2040, sending prices lower and eroding Venezuela's remaining reserves.
The role of fossil fuels is set to decline sharply after 2030, as this IEA graph shows.
Some in the Trump administration believe the rise of AI and data storage will increase energy demand, but even then, it's more likely coal, not oil, that will be used.
Venezuela's economy, under Maduro's regime, has been plundered, particularly its oil income. Profits have been siphoned off, Maduro's wife has become incredibly wealthy, and the country's oil infrastructure has decayed.
Getting the industry back on track will be a massive undertaking, with estimates ranging from a year to a decade, and at a huge cost.
For an oversupplied industry with dropping demand, it's a risky move. But Trump may not be thinking long-term. He's here for the quick wins, not the long-term strategy.
So, has Trump landed a dud with his Venezuelan oil play? The debate is open, and we want to hear your thoughts. Do you agree with Trump's move, or do you think it's a risky gamble? Let us know in the comments!
