Jan 7 (Reuters) - Oil prices declined on Wednesday after U.S. President Donald Trump said Venezuela will be "turning over" 30 million to 50 million barrels of sanctioned oil to the United States.
U.S. West Texas Intermediate crude (WTI) fell 78 cents, or 1.37%, to $56.35 a barrel by 0200 GMT, while Brent crude futures fell 61 cents, or 1%, to $60.09 a barrel.
Both benchmark prices fell more than $1 in the previous trading session as the market weighed expectations of ample global supply this year against
uncertainty around Venezuelan crude output after the U.S. capture of the country's leader, Nicolas Maduro.
"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!" Trump said in a social media post on Tuesday.
Trump’s post shows he would rather increase supply than limit it, adding to concerns about an oversupply issue in the global market, said Tina Teng, Market Strategist at Moomoo ANZ.
The deal Caracas and Washington have reached could initially require reallocating cargoes originally bound for China, two sources told Reuters earlier on Tuesday.
Venezuela has been selling its flagship crude grade, Merey, at around $22 per barrel below Brent for delivery at Venezuelan ports, giving a value for the deal at up to $1.9 billion.
That flow of oil is currently controlled entirely by Chevron, PDVSA's main joint venture partner, under a U.S. authorisation.
Chevron, which has been exporting between 100,000 and 150,000 barrels per day (bpd) of Venezuelan oil to the U.S., is the only company that has been loading and shipping crude without interruption from the South American country in recent weeks under the blockade.
“Venezuela's oil exports to the United States have first and foremost disrupted the U.S. market, which will also deepen the global oversupply,” said Yang An, analyst at Haitong Futures.
Complex geopolitical shifts captured market attention early this year, causing many to overlook weakness in the physical crude oil market amid oversupply, Haitong Futures said in a report.
Middle Eastern crude prices have continued to fall, becoming the weakest segment in cross-regional oil pricing, which has dampened investors' willingness to chase gains, Haitong Futures added.
Morgan Stanley analysts estimated the oil market could reach a surplus of as much as 3 million barrels per day in the first half of 2026, based on weak growth in demand last year and rising supply from OPEC and non-OPEC producers.
Meanwhile, U.S. crude inventories fell last week while fuel stocks rose, market sources said, citing American Petroleum Institute figures on Tuesday. The API figures showed a 2.77 million barrel decline in U.S. crude oil stocks. [API/S]
Official U.S. government statistics on the country's oil inventories are due at 10:30 a.m. EST (1530 GMT) on Wednesday.
Eight analysts polled by Reuters ahead of the report estimated on average that crude inventories rose by about 500,000 barrels in the week ending January 2. [EIA/S]
(Reporting by Sam Li and Florence Tan; Editing by Tom Hogue and Sonali Paul)
