Oil prices fell on Wednesday after Donald Trump said Venezuela would hand over up to 50m barrels of sanctioned crude to the US.
Brent crude (BZ=F) futures dropped 0.8% to $60.23 a barrel, while West Texas Intermediate (CL=F) fell 1% to $56.52 at the time of writing.
The US president said the oil (BZ=F, CL=F) would be sold at market prices, a volume that would be worth about $1.9bn at current brent levels.
Trump wrote on Truth Social: “I am pleased to announce that the Interim Authorities in Venezuela will be turning over between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil, to the United States of America.”
“This Oil will be sold at its Market Price, and that money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States!”
Read more: London falls and Europe mixed as Trump says Venezuela will send oil supply to US
In recent years, China has emerged as the largest buyer of Venezuelan crude, purchasing oil at well below market prices as Nicolás Maduro’s government sought to keep the economy afloat under international sanctions.
“This is confiscatory, imperialistic and there is no justification for it,” Jeffrey Sonnenfeld, a professor at Yale’s business school, told the Financial Times.
US officials have yet to set out a legal framework under which Venezuelan oil (BZ=F, CL=F) could be seized. The Trump administration has previously accused Venezuelan tankers of breaching US sanctions by shipping Iranian and Venezuelan crude.
Jim Reid, an analyst at Deutsche Bank, said the announcement lacked detail and may not signal a sustained shift. “There wasn’t much extra detail but this sort of volume is around 30 to 50 days of pre US blockade production so this could be the oil that has been sitting around and probably doesn’t mark the start of a trend,” he said.
Gold prices slipped on Wednesday as investors took profits after the metal briefly touched its highest level in more than one week, while a firmer US dollar weighed on sentiment.
Gold futures (GC=F) fell 0.5% to $4,474.60 an ounce, while spot prices were little changed at $4,471.83 at the time of writing. Prices remain less than $100 below last month’s record high of $4,548.92.
Market moves were being driven more by positioning than fundamentals, according to Kyle Rodda, senior financial markets analyst at Capital.com.
Prices are not being influenced “that much from a fundamental perspective, there’s a lot of speculation… price action has for the most part been skewed to the upside, but it’s showing two way volatility,” he said.