WASHINGTON (AP) — President Donald Trump is mincing no words when it comes to claiming Venezuela’s oil is now under his control. But no small part of that oil belongs to China, which is subject to a deal it struck with Caracas years ago, setting the stage for a delicate diplomatic dance over the next few weeks.
Some experts expect Trump to work on stabilizing trade relations with China. After all, Trump is expected to visit Beijing in April to salvage the fragile trade truce he struck with Chinese President Xi Jinping late last year.
“The administration appears to be focused on avoiding unnecessary escalation or new confrontations with Beijing while firmly leveraging Washington’s terms,” said Craig Singleton, senior director of the China program at the think tank Foundation for Defense of Democracies.
He added that Trump is skeptical that Venezuela risks turning into a “flashpoint that complicates trade dynamics or Trump’s personal engagement with Xi.”
According to various estimates, the debt paid by former Venezuelan President Nicolas Maduro to China by shipping oil to China is at least 10 billion dollars from Venezuela. It is possible that the interim Venezuelan government may question the validity of those debt-oil deals and stop payments, complying with Washington’s demands.
Two major Chinese state-owned enterprises – China National Petroleum Corporation and Sinopec – are entitled to 4.4 billion barrels of oil reserves in Venezuela, the highest of any foreign country, according to a research note by investment bank Morgan Stanley.
US companies have also claimed tens of billions of dollars since Caracas nationalized the oil industry, and it is unclear how these IOUs will be honored and in what order.
The US seized two sanctioned oil tankers this week as part of a plan to seize control of Venezuelan oil shipments. Energy Secretary Chris Wright said the U.S. would handle Venezuelan oil sales “indefinitely,” and deposit funds into U.S.-controlled accounts that would eventually “return to Venezuela to benefit the Venezuelan people.”
The administration said this week that the U.S. would start those sales with 30 million to 50 million barrels taken from the South American country’s crude storage facilities. Asked for more details, a Trump administration official, who was not authorized to comment publicly, said on condition of anonymity that US policy is to minimize “adverse external influences” in the Western Hemisphere.
The U.S. used such leverage over the vital natural resource after Beijing flexed its muscles last year by cutting off critical supplies of rare-earth magnets and weaponizing purchases of U.S. soybeans in a trade war with Washington. When Trump met Xi in South Korea in October, the two men agreed to a one-year truce, backing away from sky-high tariffs and export controls on each other.
China’s stake in Venezuela
Between 2000 and 2023, Venezuela was Beijing’s fourth-largest recipient of official credit, receiving $106 billion in loans from China’s official-sector lenders, according to AidData, a research lab at the College of William and Mary in Virginia that tracks Beijing’s activities abroad. But it’s unclear how much Caracas has paid and what’s still owed, said Brad Parks, EdData’s executive director, because Caracas stopped reporting loan statements several years ago.
While some estimates put the outstanding debt at $10 billion, Parks said the number could be much higher, possibly due to delays in debt repayments due to U.S. sanctions on Venezuelan oil. The loan from China, under an unusual arrangement, was set to be repaid from oil export earnings.
In China, Maduro’s capture evoked memories of another leader who struck deals with Chinese companies and then suddenly lost power: Libya’s Moammar Gaddafi.
After the fall of Gaddafi in 2011, Chinese businesses had to abandon billions of investments. Cui Shaojun, a professor of international studies at Beijing’s Renmin University, told Chinese news and commentary site guancha.cn that the transitional government in Caracas could outlaw deals under Maduro and outlaw loans to China.
As in Libya, Beijing’s stake in Venezuela goes beyond oil. Chinese companies have invested in telecommunications, railroads and ports in Venezuela, all now at risk, according to a report by global financial firm Jefferies.
Still, the firm noted that Beijing would likely manage any disruption because Venezuelan oil accounts for only a small percentage of China’s oil imports and because Beijing has diversified its energy supply and focused on electrification.
Hours before the U.S. military took over, Maduro hosted a high-ranking Chinese diplomat at the presidential palace and praised the countries’ ties, which have prospered since the time of his predecessor Hugo Chavez and gave Beijing a firm foothold on America’s rear.
Venezuela is the only Latin American country that has a high-level strategic partnership with China, along with close allies such as Pakistan, and Maduro’s ouster is expected to reduce China’s influence in the Western Hemisphere — in line with one of the goals outlined in the Trump administration’s national security strategy.
Beijing’s response to Maduro’s capture
Soon after Maduro’s capture, Beijing said it was “deeply shocked” by the brazen US use of force against a sovereign state and actions against its president, and it “strongly” condemned US actions. It called for the immediate release of Maduro and his wife.
He Yadong, spokesman for China’s Ministry of Commerce, said Thursday that no country has the right to interfere in economic and trade cooperation between China and Venezuela, which he said is between the two sovereign nations and is protected by international and domestic law.
“No matter how the political situation in Venezuela evolves, China’s desire to deepen bilateral economic and trade cooperation will not change,” he said.
Singleton said Beijing does not have as much influence in the Western Hemisphere as it claims.
“Beijing can protest diplomatically,” he said, “but it cannot protect partners or assets once Washington decides to apply direct pressure.”
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Condon reported from New York.
