Oil prices have plunged sharply after US President Donald Trump announced that "interim authorities" in Venezuela will supply 30 million to 50 million barrels of "high quality" crude to the United States. Brent crude dropped below 60 US dollars a barrel on Wednesday, triggering losses across energy markets and dragging down London-listed oil giants.
The oil, worth close to two billion US dollars (£1.5 billion), «will be taken by storage ships, and brought directly to unloading docks in the United States», Trump posted on Truth Social. The president said the money from the sales would benefit both Venezuelan and US populations, though he will control the funds.
Market impact
The announcement hit oil companies hard. BP shares fell 3% and Shell dropped 2% in early trading on Wednesday. The wider FTSE 100 declined 0.5%, or 50 points, to 10,072.5 — reversing gains from record closing highs set on Monday and Tuesday.
Richard Hunter, head of markets at Interactive Investor, said: «A further dip in the oil price on concerns of potential oversupply as a result of developments in Venezuela weighed on BP and Shell, providing a headwind which dragged the FTSE 100 back from the record closing high set yesterday.»
Kathleen Brooks, research director at XTB, noted the market's sensitivity to supply shifts. «Although the oil price was initially able to absorb the Venezuela news, today's move lower is a sign that the oil price continues to be sensitive to any shift in supply dynamics», she said.
Venezuela context
The announcement follows a US military operation to capture ousted Venezuelan leader Nicolas Maduro and transport him to the US to face drug charges. The White House has organized a meeting with executives from Exxon, Chevron and ConocoPhillips for Friday to discuss the situation.
Global oil supply is expected to exceed demand in 2026, adding to market fears of a supply glut.
Note: This article was created with Artificial Intelligence (AI).
