By Benadeta Mwaura - Reporter
United States, 7 January 2026 - Oil prices weakened on global markets on Wednesday after U.S. officials, led by former President Donald Trump, announced a controversial oil agreement with Venezuela to export crude to the United States, a deal that has drawn sharp criticism from China and raised broader geopolitical tensions.
The agreement, reportedly valued at up to $2 billion in Venezuelan crude, is expected to redirect oil supplies that would otherwise have gone to China, historically Venezuela’s largest oil customer.
The announcement triggered a sell‑off in crude futures as traders anticipated increased supply.
According to U.S. sources, and a statement issued by Donald Trump, Caracas agreed to export millions of barrels of oil to refineries in the United States under terms overseen by Washington. Senior U.S. officials say this diversion of oil supplies is intended to support both Venezuelan output and U.S. energy stocks, but also to shift Caracas toward closer cooperation with American firms.
In response to the announcement, Brent crude futures fell more than 1 %, while U.S. West Texas Intermediate (WTI) crude extended its decline amid expectations of looser supply conditions.
Beijing has reacted sharply to the new deal, publicly condemning what it called bullying tactics by the United States and warning that the move could damage China’s energy interests.
Chinese officials have said the sudden shift in oil flows undermines existing long‑term trade arrangements and could set back cooperation between the two nations.
For years, China has relied heavily on Venezuelan crude, often delivered under long‑term loan‑for‑oil arrangements tied to Chinese financing in Caracas.
The sudden pivot toward U.S. refineries, backed by U.S. pressure, is seen in Beijing as a geopolitical maneuver beyond normal commercial shifts.
Global markets have reacted to the unfolding story:
Related articles
Oil prices dropped as traders priced in expectations of growing supply and geopolitical risk easing, at least from a supply standpoint.
London stocks retreated from recent highs, with energy and commodity sectors reassessing risk in light of the U.S.–Venezuela announcement.
Gold prices eased, reflecting a strong U.S. dollar and a recalibration of risk sentiment.
The shift comes amid a broader backdrop of U.S. actions in Venezuela, including heightened pressure on the Maduro government, including recent military engagements and sanctions designed to isolate Caracas from its traditional allies, which include Russia, Iran and China.
Officials in Beijing have also urged the immediate release of detained Venezuelan leaders and criticized U.S. actions as violations of international law, framing the dispute as a matter of sovereign rights as well as energy economics.
Traders now expect Chinese refiners to seek alternative heavy crude grades, perhaps increasing imports from Iran, Russia and other sources if Venezuelan supplies continue to be rerouted.
China may escalate its diplomatic push, defending its commercial interests and challenging U.S. influence in Latin America.
Oil markets are likely to stay sensitive to geopolitical news, particularly developments in Venezuela, OPEC actions and U.S.–China relations.
