Trump Says Iran Should Be ‘Very Worried’ as US Pursues Talks

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U.S. Treasury Secretary Scott Bessent affirmed his view of the Federal Reserve as an independent agency on Wednesday, even as a historic legal battle over presidential power puts the central bank's autonomy under a microscope.

Speaking before the House Financial Services Committee, Bessent avoided giving a legal opinion on whether a president can fire a Federal Reserve official over monetary policy disagreements. He noted the issue would ultimately be decided by the Supreme Court.

Bessent acknowledged that there were "varying opinions" within the administration regarding the "unitary executive" theory—a legal doctrine that argues for expansive presidential authority over the federal government.

Supreme Court Scrutinizes Trump's Unprecedented Move

The debate is far from theoretical. The Supreme Court is currently reviewing President Donald Trump’s unprecedented attempt to oust Federal Reserve Governor Lisa Cook, a case that directly challenges the central bank's independence from political pressure.

Since the Federal Reserve was established in 1913, no president has ever tried to remove one of its officials. During arguments last month, Supreme Court justices from both conservative and liberal wings expressed unease with the administration's position, signaling concern for the potential fallout.

The core of the legal debate revolves around what qualifies as sufficient "cause" under federal law to remove a Fed official and what procedures are necessary to ensure a fair process for Cook. Justices appeared hesitant to approve the Trump administration's request to lift a lower court's order that prevents Cook from being fired while the case proceeds.

The "Unitary Executive" Theory Explained

President Trump's actions are rooted in an aggressive interpretation of the "unitary executive" theory. This doctrine advances a specific reading of Article II of the U.S. Constitution, which outlines presidential powers.

Key arguments of the theory include:

• The president possesses sole authority over the entire executive branch of the federal government.

• This power allows the president to remove any executive branch official.

• This authority holds even when Congress has passed laws to limit a president's ability to fire the heads of independent agencies.

This interpretation challenges the traditional American system of checks and balances, which divides power between the executive, legislative, and judicial branches.

Public Trust and the Fed's Credibility

When asked if he viewed the Fed as an executive or legislative agency, Bessent was direct: "I consider it an independent agency."

He stressed that the Federal Reserve's credibility is paramount. "I do believe that the Federal Reserve has to maintain credibility and be like Caesar's wife, beyond reproach," he stated.

In a separate exchange, Bessent linked the Fed's independence to public trust. He argued that the central bank had lost some of that trust by allowing inflation to rise unchecked, which he said "ravaged" the incomes of Americans.

A week of actions around rare earths

An overall focus on China

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President Donald Trump has made it clear that any nominee to lead the Federal Reserve must be committed to lowering interest rates, stating he would have rejected potential candidate Kevin Warsh otherwise.

"If he came in and said, 'I want to raise it,' he would not have gotten the job, no," Trump said in an interview with NBC News on Wednesday.

The President's Case for Rate Cuts

Trump expressed confidence that the Fed would ultimately lower rates, arguing that "we're way high in interest" at a time when "we're a rich country again."

When asked if Warsh, a former Fed governor, understood the administration's desire for a lower benchmark rate, the president affirmed, "I think he does, but I think he wants to anyway."

Fed Independence in the Crosshairs

These remarks are expected to become a focal point during any future confirmation process, where the political independence of the Federal Reserve will be a central theme of debate.

The nomination already faces political roadblocks. Republican Senator Thom Tillis, a member of the Banking Committee, has vowed to block Trump's nominees to the central bank. His opposition will continue until the Justice Department concludes an investigation into a renovation at the institution.

Current Fed Chair Jerome Powell has characterized the probe as a thinly veiled attack on the central bank's authority to set monetary policy without political interference. While Trump administration officials deny this, the president has maintained a public pressure campaign on Powell for months to ease policy.

The Candidate: Kevin Warsh's Evolving Stance

Kevin Warsh, who previously served as a Federal Reserve governor, historically held a reputation as an inflation hawk. However, his recent commentary has shifted, showing more support for the idea of lower interest rates.

President Donald Trump has indicated a new willingness to allow China and India to invest in Venezuela's troubled oil industry. However, this apparent openness is paired with a strict new licensing framework from the U.S. Treasury Department, ensuring that Washington will maintain tight control over any renewed oil trade.

Speaking to reporters on January 31, Trump said China is "welcome to come in and we'll make a great deal on oil." He also confirmed that the U.S. is coordinating with India on a plan for it to purchase Venezuelan crude as an alternative to Iranian oil, stating the basic "concept" is already in place.

These remarks coincide with new U.S. regulations that define exactly who can participate in Venezuela's oil sector, how payments are processed, and where legal disputes will be settled. Together, the comments and rules signal a cautious reopening of Venezuelan oil, channeled through a system the United States can closely monitor and enforce.

A Venezuelan oil facility highlights the nation's vast but troubled energy sector, now at the center of a US-led effort to control foreign investment.

The Fine Print: Unpacking US General License 46

The U.S. Treasury's Office of Foreign Assets Control (OFAC) recently issued General License 46, which authorizes specific activities related to Venezuelan oil. The license permits established U.S. entities to engage in lifting, shipping, buying, selling, storing, and refining oil originating from Venezuela.

But this authorization comes with significant constraints designed to assert U.S. jurisdiction:

• Legal Framework: All contracts under the license must be governed by U.S. law.

• Dispute Resolution: Any legal disputes must be adjudicated in U.S. courts.

• Payment Channels: Payments to sanctioned parties are prohibited. Instead, funds must be directed into U.S.-designated "Foreign Government Deposit Funds," where their use is restricted.

• Country Exclusions: The license explicitly forbids transactions involving Russia, Iran, North Korea, or Cuba.

The rules also place specific limits on Chinese entities. The license bars transactions involving U.S. or Venezuelan-based companies that are owned, controlled by, or in a joint venture with individuals or firms based in the People's Republic of China.

To support this framework, a White House executive order on January 9 established the Foreign Government Deposit Funds. This system ensures that Venezuela-related oil revenues moving through designated accounts are held in U.S. custody. The structure is intended to prevent funds from reaching blocked actors and gives Washington significant leverage over how Venezuela's oil money is handled.

India Eyes a Return as US Pushes Out Russian Crude

India was previously a major buyer of Venezuelan oil, importing an average of 300,000 barrels per day in 2019 before U.S. sanctions tightened in 2020. Trump's comments suggest a strategic realignment is underway.

On January 2, Trump announced a new trade agreement with India that includes immediate tariff reductions. He also stated that India has agreed to halt its purchases of Russian oil, a move aimed at pressuring Moscow financially. Since Western sanctions were imposed, India and China have been top buyers of discounted Russian crude, which helps fund Russia's war in Ukraine.

Trump noted that India is interested in buying "much more" Venezuelan oil. This interest aligns with recent changes in Venezuela's hydrocarbons law, which aims to attract foreign investment by loosening state control. For India, Venezuelan crude offers an alternative supply that is compliant with U.S. foreign policy, even if it requires accepting American oversight.

China's Billions in Loans Complicate Venezuelan Oil Play

China's involvement in Venezuela is far more complex and carries higher financial stakes. Over the past two decades, Beijing became a primary financial backer for Caracas, extending an estimated $60 billion in "loans-for-oil" agreements since 2007, according to a Columbia University analysis.

A large portion of Venezuela's oil exports has gone directly toward repaying this massive debt. By 2023, data from the U.S. Energy Information Administration (EIA) showed that about 68% of Venezuelan oil exports were directed to China.

If the U.S. successfully channels Venezuela's oil trade through its new framework, China could face significant financial losses. The Columbia analysis estimates that Beijing stands to lose between $10 billion and $12 billion on its outstanding loans. When asked on January 31 if China would ever recover its loans to Venezuela, Trump simply replied, "I don't know."

Venezuela's Production Puzzle: Can the Oil Giant Recover?

Even with a clearer legal path forward, a rapid recovery of Venezuela's oil output is unlikely. The nation sits on an estimated 303 billion barrels of proven oil reserves—among the world's largest. However, much of this is heavy or extra-heavy crude that requires costly specialized processing and blending.

Decades of mismanagement, sanctions, infrastructure decay, and a brain drain of skilled workers have devastated the industry. After producing around 3.5 million barrels per day in the late 1990s, output had fallen to an estimated 1.1 million barrels per day by late 2025.

Recent U.S. import data from the EIA shows flows from Venezuela remain minimal, ranging from 72,000 to 120,000 barrels per day in January 2026. While an increase from virtually zero, these volumes are negligible in the global market.

Wall Street analysts are forecasting modest growth. In a January 8 report, JPMorgan Chase estimated that production could climb to between 1.3 million and 1.4 million barrels per day within two years under a new administration. Goldman Sachs analysts projected in a January 5 interview that if output reaches 2 million barrels per day, global oil prices could fall by about $4 per barrel, benefiting U.S. consumers but creating deflationary pressure for other oil-producing nations.

President Donald Trump expressed strong confidence on Wednesday that the Federal Reserve will lower its benchmark interest rates, signaling his clear expectations for the central bank's monetary policy.

In an interview with NBC News, Trump stated there was "not much" doubt in his mind that the Fed would move to cut rates. His comments underscore his long-standing preference for a more accommodative monetary stance to fuel economic activity.

Fed Chair Nominee Must Favor Lower Rates

The president also tied his preference for monetary easing directly to his selection for the Federal Reserve's leadership. Discussing his nominee, Kevin Warsh, Trump suggested that an alignment on interest rate policy was a core requirement for the job.

When asked if Warsh understood the president's desire for lower rates, Trump replied, "I think he does, but I think he wants to anyway."

Trump made it explicit that any candidate advocating for rate hikes would be disqualified from consideration. "I mean, if he came in and said, 'I want to raise them' ... he would not have gotten the job. No," the president affirmed.