We are told that Venezuela has the largest oil reserves in the world at some 300 billion barrels of proven reserves, and that explains Trump’s recent actions in Venezuela.

But the definition of ‘proven reserves’ is oil that it is technically possible to extract with current technology and extracting the oil and getting it to market can be done at a cost that is less than some market price for oil.

The current market price for Brent crude is ~$70.

The current estimated operating cost for producing a barrel of Venezuelan oil from existing fields is $80-90.

The oil price required to justify investing capital in developing a new field would be higher – of the order of $110-120.

The definition of ‘proven oil reserves’ is not based on the current spot price but on a more generous estimate of expected future oil prices.  That is why it remains definitionally correct to say that Venezuela has 300 billion barrels of oil.

However, in practical terms, operating existing oilfields in Venezuela and developing new oilfields would present little attraction to most oil companies.

So it is very dubious to say that Trump went into Venezuela to gain access to the oil.

Trump went into Venezuela because he was worried that Chinese ideas of how to organise an economy would gain wider acceptance in South America.  

Martin Seale

PS:

I wonder if Trump’s likely attack on Iran can be completely separated from his longer term objective of limiting Chinese power.  

China gets some 13% of its hydrocarbons from Iran.  It must be very tempting to reduce that to 0%.  

Though, it would presumably push China and Russia further together.