U.S. Economic Sanctions Escalate Pressure on China

As the world's largest crude oil consumer, the U.S. also acts as a major oil producer, directly influencing international oil prices by adjusting its own production volume.

Due to this technological advantage and market dominance, the U.S. virtually dictates global oil prices.

The speaker interpreted this as criticism from the perspective of Venezuela, not the U.S., because the U.S. securing operation rights for Venezuelan oil fields for the next 25 years represents a significant benefit from the U.S. perspective.

The U.S. aims for a limited daily production of approximately 1.5 million barrels from Venezuela. The possibility of increasing production to 3 to 5 million barrels in the long term remains uncertain.

Therefore, at this stage, Venezuelan crude oil is not expected to significantly impact world oil prices or the global economy.

Venezuela's crude oil production and sales are now entirely under U.S. control; while it remains an OPEC member on paper, its significance has faded.

Currently, OPEC's daily production stands at 16 to 18 million barrels, which is similar to or even less than U.S. production. This demonstrates the significant decline in OPEC's former stature.

Since February this year, all oil produced in Venezuela has been consigned to the U.S. for production and sale. Even if Venezuela sells oil directly, the purchasing market pays the U.S. Treasury Department.

This means the U.S. Treasury Department directly manages the payment for Venezuelan oil sales. Funds are disbursed to the Venezuelan government in installments for budgetary purposes, with the U.S. completely controlling the flow of funds.

Through these measures, the U.S. has gained 100% control over Venezuelan oil sales rights.

Currently, U.S. effectively controls Venezuelan oil exports, and the Venezuelan government desires this U.S. control.

Under U.S. management, Venezuela can receive payments based on WTI or Brent international oil prices, thereby increasing its revenue. This change from the past practice of selling cheaply to China has reduced China's influence.

Currently, Chinese oil tankers are lining up at Texas ports to receive oil.

Russia wants to sell crude oil to China but faces difficulties in securing tankers due to U.S. sanctions. China, mindful of U.S. sanctions, has refused to build pipelines with Russia.

Therefore, it is unlikely that increased Chinese reliance on Russian crude oil will be a significant variable in the Russia-Ukraine war.

Russian President Vladimir Putin's visit to China to agree on pipeline construction failed. This was because Chinese President Xi Jinping said 'No,' mindful of U.S. sanctions against Russia.

China has determined that it lacks the national strength to risk an economic gamble that would trigger U.S. sanctions, and thus it is hesitant to commit to significant crude oil purchases through pipeline construction with Russia.

China consumes 15 million barrels of oil daily, with approximately 9 million barrels imported. With traditional oil suppliers like Iran and Venezuela becoming unstable due to U.S. sanctions, China faces challenges in securing stable supply sources.

Russia, whose sales channels are blocked by Western sanctions, is likely to use oil as a strong leverage to strengthen cooperation with China.

In this situation, China and Russia are expected to further solidify their oil-based cooperative system.

In the past, the U.S. primarily sanctioned large-scale shipowners or key individuals. However, the U.S. Treasury Department recently announced that it would expand Iran-related sanctions to include small-scale entities and individuals.

This appears to be a strategy to increase the precision of sanctions and intensify economic pressure on China and Russia. China and Russia currently lack effective countermeasures against these small-scale sanctions.