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This report covers the U.S. deal to import Venezuelan oil, the global seizure of sanctioned tankers with UK support, and Mexico’s growing role as an energy supplier to Cuba.
The United States and Venezuela have reached an agreement for Caracas to export up to $2 billion worth of crude oil to the U.S.. President Donald Trump announced that Venezuela would be “turning over” 30–50 million barrels of oil under this deal, likely drawn from tankers idling in floating storage since the U.S. imposed a naval blockade in mid-December. The arrangement, made with a new U.S.-aligned interim leadership in Caracas, aims to boost the supply of heavy crude to U.S. Gulf Coast refineries while cutting off the illicit flow of discounted Venezuelan oil to China. In effect, barrels that would have gone to China are being redirected to American refiners, who have been eager for heavier, sour grades amid a tight market.
This pivot comes on the heels of dramatic political change in Venezuela. The U.S. special forces captured President Nicolás Maduro on January 3rd, paving the way for a Washington-friendly government. Only Chevron had been authorized to operate in Venezuela under U.S. sanctions (shipping about 140,000 bpd of Venezuelan crude to its own Gulf Coast refineries). Now, with sanctions pressure intensifying, President Trump is insisting that Venezuela’s interim president (reportedly Delcy Rodríguez) grant American companies “total access” to the oil industry going forward. The first crude exports under the new deal are expected to come from oil that accumulated in storage during the recent blockade.
Meanwhile, Venezuelan shipments to Asia have ground to a halt. State oil firm PDVSA has been unable to dispatch cargoes to China or other Asian buyers for nearly a week as the U.S. “oil quarantine” disrupts tanker traffic. China – formerly Venezuela’s top customer – is now receiving much lower volumes, and Chinese refiners have scaled back purchases as the once-steep discount on Venezuela’s Merey crude has narrowed (the Brent-Merey price gap shrank from $15 last month to about $13). The U.S. naval blockade, which Secretary of State Marco Rubio vowed is “not about to be lifted anytime soon,” has effectively raised the price of Venezuelan crude by choking off its routes to market. By severing Venezuela’s energy ties with China, Washington hopes to repatriate those barrels to the Western Hemisphere and deny Beijing a strategic foothold in the hemisphere’s oil supply chain.
The U.S. is dramatically expanding the reach of its Venezuela oil blockade, turning what began as a regional Caribbean patrol into a global interdiction campaign. In the last 48 hours, U.S. forces seized two more sanctioned oil tankers far from Venezuelan waters as part of the “quarantine” effort. The first vessel, the M/V Bella 1, was intercepted in the North Atlantic south of Iceland after a weeks-long pursuit. This tanker had originally been heading to Venezuela in late December but turned back near the Leeward Islands to evade capture, even reflagging under a Russian flag and repainting its hull with Russia’s tricolor in a bid for protection. Despite these ploys – and despite a Russian Navy submarine escorting it at one point – the Bella 1 was boarded and seized under a U.S. federal court warrant, with crucial support from the UK’s military surveillance assets. British Defence Secretary John Healey lauded the operation, noting it “shows just how well” the US-UK defense partnership works in practice.
Shortly after, the Pentagon announced the capture of a second ship, the M/T Sophia, in international waters of the Caribbean Sea. Like the Bella, the Sophia was part of the so-called “ghost fleet” of sanctioned tankers. It had been involved in Russian oil trades – loaded via ship-to-ship transfers off Ceuta, Spain in 2023 and known to ferry illicit Venezuelan crude to China. A video clip of the raid showed the Sophia riding low in the water, indicating it was loaded, reportedly with ~2 million barrels of Venezuelan crude from the José terminal.
These back-to-back seizures bring the total to four tankers detained since the quarantine began in mid-December. All the seized vessels were already under U.S. sanctions and have links to other sanctioned oil trades (in fact, all four had carried oil on behalf of Iran’s IRGC at some point). Defense Secretary Pete Hegseth underscored that the blockade “remains in FULL EFFECT — anywhere in the world,” signaling that no ocean is off-limits. The Biden – correction, Trump – administration (in this scenario) has shown a willingness to chase down sanctioned tankers well beyond the Caribbean, even at risk of confrontation with Russia. The Bella 1 incident risked inflaming Moscow – the Kremlin had explicitly asked the U.S. Navy to back off the pursuit – but Washington proceeded regardless, emphasizing that no flag of convenience or naval escort will shield illicit oil shipments from enforcement.
U.S. officials describe this aggressive posture as necessary to strangle the financial lifelines of the former Maduro regime and its enablers. In interviews after Maduro’s ouster, Secretary of State Rubio stressed that restricting Venezuela’s oil flows is “crucial” leverage over the new leaders who succeed him. By cutting off unauthorized routes and seizing rogue cargoes, the U.S. hopes to tighten the squeeze on any remaining shadow trade. The global scope of these operations – from the Caribbean to the North Atlantic – makes clear that the “oil quarantine” has effectively become a worldwide embargo, enforced on the high seas. It also showcases unprecedented international cooperation: even U.S. allies like the UK are actively assisting in high-seas interdictions of sanction-dodging tankers.
As Venezuela’s oil exports retrench under U.S. control, Cuba’s energy security has been thrown into uncertainty – and Mexico has quietly emerged as the island’s crucial lifeline. For decades, Cuba relied heavily on subsidized Venezuelan oil, but those shipments have plummeted amid Venezuela’s turmoil and the U.S. blockade. Mexico has stepped in to supply a significant share of Cuba’s fuel needs, a move that risks diplomatic friction with Washington even as Mexican officials insist they are merely honoring existing commitments.
Mexican President Claudia Sheinbaum acknowledged this week that “with the current situation in Venezuela, Mexico has become an important supplier” of crude to Cuba. She was quick to add that “no more oil is being sent than has been sent historically; there is no specific shipment”, framing Mexico’s aid as routine or humanitarian. Indeed, Mexico has long provided Cuba occasional energy relief – for example, sending 100,000 barrels of fuel after Cuban protests in 2021, and a surge of 400,000+ barrels during blackouts in late 2024. Recent data confirms that from January through September 2025 Mexico shipped about 19,200 barrels per day to Cuba (17,200 bpd of crude plus 2,000 bpd of refined products). That accounted for roughly 3.3% of Mexico’s total oil exports, a relatively small slice, but absolutely vital to Cuba’s power generation and transportation.
However, these shipments have not gone unnoticed by the U.S. Trump administration. After a visit by U.S. Secretary of State Marco Rubio to Mexico City in September 2025, Mexico’s oil flow to Cuba reportedly dropped from ~22,000 bpd to just 7,000 bpd, suggesting U.S. pressure had an immediate impact. Washington’s hardening stance on both Venezuela and Cuba means any increase in Mexican support to Havana could become a flashpoint. “The U.S. government would go bonkers,” one energy analyst said of the prospect that Mexico might boost oil exports to Cuba in the wake of Venezuela’s cutoff. More U.S. pressure on Mexico is likely forthcoming regarding Cuba, with oil supply high on the list of American concerns.
From Cuba’s perspective, the outlook is grim. The loss of Venezuelan shipments – which averaged ~35,000 bpd in the last quarter of 2025, about a quarter of Cuba’s total demand – combined with only modest inflows from Mexico, means fuel shortages and blackouts on the island could intensify. Cuban citizens are already bracing for harder times: “The blackouts are going to intensify with all this,” one Havana resident lamented, noting Cuba has depended on Venezuela for as long as he can remember. It’s unclear if any other country will step up to fill the gap; few nations are willing to defy U.S. sanctions by sending oil to Cuba. Mexico finds itself walking a tightrope – trying to uphold a longstanding policy of solidarity with Cuba (and fulfilling contract obligations via state oil company Pemex) without provoking an aggressive response from its northern neighbor.
Complicating matters, Pemex itself is struggling with declining production and export volumes. 2025 is on track to be the company’s worst year for crude exports (less than 600,000 bpd, down from over 1 million just a couple years ago). Diverting even a small portion of Mexico’s output to Cuba, often on favorable terms, raises economic questions at home. Pemex shipments to Cuba, valued around $400 million for the first nine months of 2025, were officially recorded as sales at market prices, but experts note a lack of transparency – some cargoes might effectively be subsidized or bartered (for example, in exchange for Cuban doctors or as political goodwill). The Mexican government has routed these dealings through a private Pemex subsidiary, Gasolinas Bienestar, further obscuring the financial details.
In short, Mexico has become Cuba’s unlikely energy lifeline just as Venezuela’s role diminishes. This development is injecting new tension into U.S.-Mexico relations at a sensitive time. President Sheinbaum’s balancing act – emphasizing humanitarian motives and “historic” levels of support – may not satisfy Washington. As the U.S. ramps up its hemispheric campaign against both the Caracas and Havana regimes, Mexico’s Cuba connection will be under a spotlight. Whether Mexico will maintain, increase, or curtail these oil shipments in the face of U.S. pressure is a storyline to watch in the coming weeks.
One of the clearest strategic aims of the U.S. oil blockade has been to dismantle Venezuela’s oil-for-China supply line, and early signs indicate this effort is succeeding. For the first time in years, PDVSA has virtually stopped sending crude to Asia: no tankers have loaded for Asian destinations in over a week. This forced pause has already started to hit Chinese refiners, which are receiving far fewer Venezuelan barrels than usual. In fact, Chinese buyers themselves have throttled back on taking Venezuelan crude because the economics have shifted – with the U.S. choking off supply, Venezuelan crude prices have inched up relative to benchmarks. The discount for Venezuela’s flagship Merey crude (versus Brent) narrowed to about $13 per barrel, from $15+ last month, eroding the incentive for Chinese importers to keep dealing with the logistical hassles and sanctions risk.
Before this crisis, China was the top destination for Venezuelan oil, often via indirect routes and intermediary traders to dodge U.S. sanctions. Those flows provided Caracas with crucial revenue (albeit at steep discounts) and gave Beijing a stable source of heavy sour crude for its teapot refiners. Now the U.S. blockade has effectively severed that artery. The Biden administration – which, through Secretary Rubio, explicitly said the embargo will stay until further notice – is using Venezuela’s oil as a geopolitical lever. By denying China access to Venezuelan crude, Washington increases the pressure on Beijing’s partners in Caracas and potentially makes China think twice about propping up what’s left of Maduro’s circle. It’s a direct attempt to break the Venezuela–China energy axis that had developed over the past decade.
The immediate consequences of this “China disconnect” are twofold. First, Venezuela is accumulating unsold oil in storage and idle tankers as Asian outlets dry up – hence the urgency to reroute some of that oil to the U.S. under the new deal. Second, Chinese refiners are turning elsewhere for heavy crude. They may increase purchases from alternative sources like Iran (itself under sanctions) or Russia’s Far East, or simply run at lower utilization if economics dictate. In the long run, China loses a preferential supply channel and Venezuela loses a major customer, fundamentally reshuffling global oil trade patterns.
It’s worth noting that this strategy is as much about symbolism and influence as oil barrels. By swooping in to “rescue” Venezuela’s oil industry and explicitly redirecting output to America, the U.S. is asserting primacy in a region that had increasingly looked to China for investment. U.S. officials have openly stated this is about more than just markets – it’s about who gets to shape Venezuela’s future. Energy Secretary Chris Wright’s comments underscore that Washington intends to “control [Venezuelan] oil sales indefinitely” and use the leverage to guide Venezuela’s reconstruction. Those sales will now be funneled through U.S.-approved channels (even through American financial institutions) rather than through opaque dealings with China.
In the short term, global oil markets are watching nervously. Removing Venezuelan crude from Asia tightens supply for certain refineries and may improve the bargaining power of other heavy crude producers. However, if the 30–50 million barrels now earmarked for the U.S. hit Gulf Coast refineries steadily, it could also stabilize that segment of the market. Whether this re-routing of crude leads to stability or new volatility remains to be seen. If diplomatic tensions with China escalate as a result, there could be broader repercussions (for instance, China could respond by deepening ties with Iran or Russia in energy). For now, Venezuela’s oil exports have been transformed into a primarily Western-hemisphere affair, with Beijing largely boxed out – a stark reversal from just a few months ago.
For U.S. oil refiners, especially along the Gulf Coast, the sudden availability of Venezuelan heavy crude is welcome news and a significant operational win. Many Gulf Coast refineries are specifically designed to process heavy, sour crude oil – a legacy of years spent running Venezuelan, Mexican, and Canadian barrels. Facilities owned by companies like Valero, Phillips 66, Chevron, and Marathon were “purpose-built for Venezuelan heavy crude” and could see improved profit-margins now that those flows may resume. Heavy crude typically trades at a discount to lighter grades, yet when processed in refineries equipped with coking units and hydrocrackers, it can yield a large volume of high-value products like diesel and jet fuel. In fact, the Gulf’s complex refineries often achieve some of their best refining margins by cracking heavy feedstock into diesel, a product that has been in strong demand.
Before U.S. sanctions on Venezuela (and the collapse of its oil sector) cut off supplies, Venezuelan Merey crude was a staple for Gulf refiners. They spent billions over decades installing desulfurization and coker capacity precisely to handle such lower-quality crudes. In recent years, with Venezuela’s absence, refiners had to scramble for substitutes – for example, heavier grades from Canada’s oil sands, Mexico’s Maya crude, or even Middle Eastern grades – and sometimes they resorted to blending lighter oils with residues to mimic heavy crude. These alternatives often came at higher cost or logistical headache. Gaining access to ~50 million barrels of Venezuelan crude now provides a stable, dedicated stream of the type of oil these refineries run best. It reduces their feedstock uncertainty and could lower input costs if the terms of the deal keep Venezuelan crude priced attractively (early indications are that Venezuelan barrels will still be relatively cheap due to the country’s urgency to sell).
Analysts note that Phillips 66’s Lake Charles and Sweeny refineries, Valero’s system, and Marathon’s plants stand out as beneficiaries, since they were engineered for Orinoco Belt extra-heavy blends. “We’ve got refineries designed for the long term to process that crude,” Phillips 66 CEO Mark Lashier remarked, emphasizing the fit of Venezuelan oil to his equipment. Even though heavy sour crudes can be more challenging and historically yield slightly lower profit per barrel than light sweet crudes, they become very profitable when the refinery is optimized for them and the crude is discounted. That appears to be the case now. Gulf Coast diesel crack spreads (the profit margin for turning crude into diesel) have been healthy, and having a reliable heavy supply can maximize diesel output. As a result, shares of major U.S. refiners jumped on the news that Venezuelan oil could be flowing north: Valero and Phillips 66 stock prices both rose following the announcement of U.S. control over Venezuelan sales.
Additionally, Chevron, the lone U.S. major still operating in Venezuela, stands to benefit doubly. It not only can ramp up production in its joint ventures with PDVSA (knowing there’s an assured U.S. market for the oil), but it also feeds that crude to its own refining network. Chevron currently produces roughly 25% of Venezuela’s oil output and exported about 140,000 barrels per day to the U.S. under its sanctions waiver. With the new political deal, Chevron and potentially other companies could raise that volume significantly. This will further improve feedstock optionality for U.S. refiners. In short, having Venezuela “back in the mix” is a boon for Gulf Coast optimization: it means refineries can run at higher utilization with the preferred type of crude, and potentially at lower cost, which in turn bolsters U.S. diesel and fuels production.
In Washington, the Venezuelan crisis is being framed not just as a foreign policy challenge but as an opportunity for a grand reconstruction of Venezuela’s economy – led by American capital and know-how. Top U.S. officials are explicit about their intentions to use Venezuela’s oil wealth as the engine for rebuilding the nation after two decades of mismanagement. Energy Secretary Chris Wright stated that the U.S. will “control [Venezuela’s] future oil sales indefinitely, and use the proceeds to rebuild the nation’s beleaguered economy.” This effectively means oil revenues that once flowed to the Maduro government (and were often diverted to service debt to China, Russia, or line officials’ pockets) will now be escrowed or directed in a way Washington sees fit. “We need to have that leverage and that control of those oil sales to drive the changes that simply must happen in Venezuela,” Wright said, underscoring that U.S. oversight of oil money is aimed at political and economic reform in Caracas.
Interior Secretary Doug Burgum struck a similarly optimistic tone, arguing on Fox News that with American technology and partnership, “Venezuela can be transformed.” He emphasized that Venezuela now has a chance to have foreign capital come in and “rebuild their economy and take advantage” of its vast resources. The Trump administration has already invited private firms to get involved: President Trump is pressuring Venezuela’s interim government to grant U.S. companies “total access” to the oil industry – from production to refining to distribution. This suggests that previously off-limits opportunities (due to nationalization and sanctions) could open up. Indeed, reports indicate White House officials have been meeting with executives of major oil companies and commodity traders about pumping new investment into Venezuela.
A likely long-term plan would see U.S. oil producers and service companies re-enter the Orinoco Belt, Venezuela’s chief oil producing region, which holds the world’s largest proven reserves of heavy crude. Companies like ExxonMobil and ConocoPhillips, which exited Venezuela in 2007 and are still owed billions from asset expropriations, could negotiate settlements and return to operations under more favorable terms. Oilfield service giants such as Halliburton and SLB (formerly Schlumberger) are eyeing the potential windfall of contracts to refurbish Venezuela’s dilapidated oil infrastructure. Oil services firms like Halliburton and SLB “could win billions in reconstruction contracts,” one analysis noted, though it cautioned such gains may take years to materialize. The scope of work is enormous: many of Venezuela’s pipelines are 50+ years old, refineries are at 10–20% of capacity, and output has plummeted to a fraction of historical levels. By one estimate, it could require at least $100 billion of investment over a decade to restore production to late-1990s levels. That represents a massive, multi-year business opportunity for American engineering, procurement, and construction firms – if the political climate allows and funding is secured.
Crucially, the U.S. is positioning itself to hold the purse strings of any Venezuelan recovery. Under the emerging plan, revenue from oil sales would be placed into accounts that can be monitored (or controlled) by the U.S. and its chosen partners, rather than freely dispensed by Caracas. American banks may act as custodians for these funds. The money could then be disbursed for approved uses: modernizing oil facilities, paying down Venezuela’s debts to creditors, and funding social programs to stabilize the country. This model mirrors past U.S. interventions where a country’s commodity sales were overseen by international or U.S. administrators (for example, the Iraqi oil-for-food program, though the circumstances differ). While some critics label it neo-colonial, U.S. officials defend it as the only way to ensure Venezuela’s vast oil riches actually benefit its people and not another corrupt regime.
Notably, the mere prospect of Venezuela’s reopening has already prompted financial moves. TankerTrackers data show four sanctioned tankers (carrying Iranian/Venezuelan oil) have been seized in recent weeks, and the administration is hinting that sanctioned oil might be sold for the benefit of the Venezuelan people via escrow mechanisms. International response is split: U.S. allies in Europe and Latin America have cautiously welcomed the idea of a Venezuela transition and reconstruction, while rivals like Russia and Iran decry the seizures as piracy. The UK’s active cooperation in the Bella 1 seizure indicates a section of the global community is backing the U.S. approach.
The “reconstruction” narrative serves to justify the extensive military and economic campaign now underway. By presenting the blockade and oil seizures as steps to fund Venezuela’s recovery, the U.S. government is hoping to win hearts and minds both in Venezuela and internationally. It paints the recent deal – Venezuela handing over $2 billion in oil – not as plunder, but as the first tranche of investment in Venezuela’s future. “Venezuela has an opportunity now… to rebuild their economy,” Burgum said, emphasizing that this is a chance to undo years of decline. Time will tell how this promise plays out on the ground in Venezuela, and whether redirecting oil revenues to approved channels truly leads to economic revival or stirs new discontent about sovereignty. For now, Washington is firmly in the driver’s seat of Venezuela’s oil sector and is steering it on a path integrally linked with U.S. policy goals.
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Bass Energy & Exploration is independently owned and operated by the Bass family.
Bass Energy & Exploration
7 NE 6th Street
Oklahoma City, OK 73104