Trump’s move on Venezuelan oil raises concerns throughout the American shale industry

Concerns Rise Over Trump’s Venezuela Oil Strategy

Executives from the U.S. shale industry have voiced apprehension that Donald Trump’s proposed intervention in Venezuela’s oil sector could harm American oil companies, according to a Financial Times report featuring insights from several industry leaders.

Industry insiders warn that a U.S.-led push to boost Venezuelan oil output could drive global oil prices down—a scenario that would put significant financial strain on many shale producers, who already operate on tight margins.

One executive, speaking anonymously to the Financial Times, criticized the administration’s approach, stating, “This feels like another instance of the government working against us. If Washington starts backing oil production growth in Venezuela, I’ll be extremely frustrated.”

Trump has indicated that U.S. oil giants willing to invest in Venezuela may receive financial backing. He recently suggested that American companies could resume operations there within a year and a half, noting, “A substantial investment will be required, and oil firms will spend the money upfront, but they’ll be reimbursed by us or through future revenues.”

The CEO of Latigo Petroleum told the Financial Times, “It seems the administration would rather channel American funds into reviving Venezuela’s oil sector than support our independent domestic producers.”

Revitalizing Venezuela’s oil industry requires massive capital—resources that only the largest oil corporations possess. Trump is expected to meet with these major players to discuss the plan. Unlike smaller shale operators, these supermajors are better equipped to weather periods of low oil prices.

Dan Pickering of Pickering Energy Partners commented to the FT, “US shale’s frustration is understandable—not only could Venezuelan output increase, but the government appears poised to subsidize it.”

By Irina Slav, Oilprice.com

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