Pepe Escobar : How Trump’s Oily Dreams May Collapse in a Venezuelan Dark Pit

So the Big Oil Picture in Venezuela is way more complex than the Trump 2.0 gang suspects.

Let’s start with neo-Caligula’s new edicts on the imperial satrapy he says he now owns; not exactly edicts but outright threats directed to interim President Delcy Rodriguez:

1. Crack down on “drug trafficking flows”. Well, this should actually be directed to Colombian and Mexican smugglers in cahoots with big American buyers.
2. Expel Iranian, Cuban, and other “operatives hostile to Washington” – before Caracas is allowed to increase oil production. Not happening.
3. Halt oil sales to “US adversaries”. Not happening.

Hence, it becomes a near certainty that neo-Caligula may bomb Venezuela again.

Neo-Caligula, in a separate motormouth offensive, also clarified that he wants to somewhat overhaul the oil business in Venezuela via subsidies. It “could take less than 18 months”; then it morphed to “we can do it in less time than that, but it’ll be a lot of money”; and finally morphed to “a tremendous amount of money will have to be spent, and the oil companies will spend it.”

No, they won’t, as several proverbial “industry insiders” have advanced. US energy majors balk at the sight of investing fortunes in a nation that may be engulfed by total chaos if neo-Caligula forces a traitorous government over 28 million people.

According to Rystad Energy Analysis, it would take no less than 16 years and at least $183 billion for Venezuela to produce a mere 3 million barrels of oil a day.

Neo-Caligula’s ultimate dream is to reduce global oil prices to a maximum $50 a barrel. For this purpose, the Trump 2.0 imperial gig will, in theory, totally control PDVSA, including the acquisition and sale of virtually all of its oil production.

US Energy Secretary Chris Wright, at a Goldman Sachs energy conference, let the oily cat out of the bag:

“We are going to market the crude coming out of Venezuela, first this backed up stored oil [up to 50 million barrels], and then infinitely, going forward, we will sell the production that comes out of Venezuela into the marketplace.”

So essentially the neo-Caligula gig will capture, actually steal the sale of crude from PDVSA, with the money theoretically deposited in US-controlled offshore accounts to “benefit the Venezuelan people”.

There’s no way Delcy Rodriguez’s interim government will accept what amounts to de facto theft. Even as Homeland Security Advisor Stephen Miller is bragging that the US is using “military threat” to maintain control of Venezuela. If you are really in control, you don’t need to issue threats.

So what about China?

China was importing roughly 746,000 barrels of oil a day from Venezuela. That’s not much. Beijing is already working on replacing it with imports from Iran. China essentially is not dependent on Venezuelan oil. Apart from Iran, it may also source from Russia and Saudi Arabia.

Beijing clearly sees that the imperial overdrive in the Western Hemisphere and in West Asia is not just about oil, but also to force China to buy energy with petrodollars. Nonsense: with Russia, the Persian Gulf and beyond, the name of the game is already petroyuan.

China is 80% energy independent. Venezuela de facto was accounting for a mere 2% of the 20% China imports – and this according to the US government’s own numbers.

Exxon says Venezuela's oil is "Un-Investible"

China’s energy relationship with Venezuela goes way beyond cheap American formulas. Here is essentially outlined how “Chinese oil agreements with Venezuela are de facto binding financial contracts, with repayment mechanisms, collateral structures, penalty clauses, and derivative linkages embedded deep into global finance (…) They are connected – directly and indirectly – to Western financial institutions, commodity traders, insurers, and clearing systems, including entities tied to Wall Street. If these contracts are broken, the consequence is not China ‘taking a loss’. It is a cascade event: defaults triggering counterparty exposure, derivatives being repriced, legal disputes crossing jurisdictions, and confidence shock spreading outward. At a certain point, this ceases to be a Venezuelan problem and becomes a systemic global one.”

Moreover, “over the past twenty years, China has become the operational core of Venezuela’s oil industry. Not merely as a buyer, but as a builder. China provided refinery technology, heavy crude upgrading systems, infrastructure design, control software, spare parts logistics (…) Remove the Chinese engineers. Remove the technicians who understand the control logic. Remove the maintenance supply chains. Remove the software support. What remains is not a functioning oil industry waiting to be ‘liberated’, but an inert shell.”

Conclusion: “Converting Venezuela’s Chinese-built oil sector into an American one would take three to five years, minimum.”

Financial analyst Lucas Ekwame hits the major points. Venezuela produces superheavy oil as thick as tar. It doesn’t just flow; it needs to be melted to reach the surface, and after extraction, it hardens again, requiring diluent: no less than 0.3 barrels of diluent need to be imported for each exported barrel.

Compound it with Venezuela’s energy infrastructure shaped by China and at the same time suffering years of American sanctions, even worse than over Iraq in the early 2000s, and neo-Caligula’s faulty oil “strategy” becomes obvious.

Paul Singer

That of course does not alter the short-term feast of imperial hedge fund vultures over Venezuela’s carcass, starting with ghastly Paul Singer, the billionaire Zionist hedge fund manager and MAGA super PAC donor ($42 million in 2024) whose Elliott Management acquired the Houston-based subsidiary of CITGO for $5.9 billion in November, less than a third of its $18 billion market value, thanks to the embargo on Venezuelan oil imports.

The speculative money crowd is bound to cash in on up to $170 billion in the debt market; defaulted PDVSA bonds alone are worth over $60 billion.

So the Big Oil Picture in Venezuela is way more complex than the Trump 2.0 gang suspects. Of course, on the road ahead we may come to a situation where the Viceroy of Venezuela, the gusano Marco Rubio, cuts off the oil flow from Caracas to Shanghai. Well, considering Rubio’s strategic “expertise”, better start regimenting battalions of lawyers right away.