US control over Venezuelan oil threatens billions owed to China

Venezuela is emerging as a major test of Donald Trump’s hemispheric ambitions, with the country’s oil reserves putting US pressure on China’s financial interests in Caracas into sharper focus.

After announcing plans to take control of more than 65 billion barrels of Venezuelan crude reserves, the Trump administration indicated that the move was only a beginning. Washington’s stated aim is to marginalize China and Russia, which the White House has described as “malign foreign actors,” and ensure that US dominance in the hemisphere is never again challenged.

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Venezuela is not necessarily a precedent for direct expropriation, but it could be one for forced exclusion.

The next issue is Venezuela’s debt restructuring, including billions of dollars owed to China. US Energy Secretary Chris Wright said on Wednesday that Beijing would have no right to claim revenue from new Venezuelan production. That would remove one possible route for Caracas to make payments to Chinese creditors.

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The United States is increasingly willing to view certain aspects of the region’s economic relationship with China as a security issue and to exert considerable influence to impose those red lines.

The United States has presented the campaign as the latest chapter of the “Donroe Doctrine,” set out in the White House National Security Strategy. That strategy asserts a unilateral US right to deny rival powers the ability to own or control strategically vital assets. Under that approach, taking Venezuelan oil fields away from Chinese companies becomes a geopolitical opportunity to align them with Washington’s interests.

China has reduced its exposure to Venezuela in recent years, and the article says Trump may find it difficult to reproduce the scale of his actions there elsewhere. For Beijing, the implications may therefore be more political than economic. Christian Reyes, a Beijing-based political-risk analyst from Ecuador, warned that a more interventionist US position could collide with China’s broader interests in South America.

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Beijing’s legitimate rights and interests in Venezuela must be protected.

“Venezuela is not necessarily a precedent for direct expropriation, but it could be one for forced exclusion,” Reyes said. China’s Foreign Ministry spokesman Guo Jiakun offered a relatively restrained response, saying Beijing’s legitimate rights and interests in Venezuela “must be protected” and that China-Venezuela cooperation is protected by international law and does not concern any third party.

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Cooperation between China and Venezuela is protected by international law. It does not concern any third party.