US claim on Venezuelan oil reserves is a deliberate red cape to a bull

The United States' claim on Venezuelan oil reserves appears to be a calculated move to provoke a confrontation, according to a recent analysis. President Donald Trump announced the plan on Friday, stating that it would secure "majority US control of more than 65 billion barrels of proven oil reserves in Venezuela," which he claimed "doubles American oil reserves."

The proposed deal involves partnering with Alejandro Betancourt, a Venezuelan investor, and the Office of Strategic Capital, a part of the US Department of Defense. The project targets 1.5 million barrels per day of output over 25 years at an investment of $100 billion. In return, Venezuela would receive an estimated $209 billion in taxes, or around $19 per barrel, assuming an oil price of $65.

The scheme also allegedly aims to convince Venezuela to leave Opec. The plan has several issues, including the lack of legal mandate for the OSC to take equity stakes in projects and the fact that investing in foreign projects does not automatically grant ownership of them. Additionally, the US move could be interpreted as an attempt to assert control over Venezuelan oil, which contravenes the Venezuelan constitution.

The country's output has recovered to about 1.1-1.2 million barrels per day, but it is still far below its previous Opec quota of two million barrels per day. The US is unlikely to achieve its objectives by increasing Venezuelan output, especially as western oil companies are already increasingly active in the country.