The oil sector in Venezuela and the United States have had a symbiotic relationship throughout recent history. In the photo: Oil facilities in Puerto La Cruz, Venezuela. Hugo Londoño.
Guacamaya, February 15, 2025. The recent renewal of Chevron’s special license, extending its operations in Venezuela for six months, has contrasted with previous statements by U.S. President Donald Trump, who expressed his intention to prohibit oil purchases from the Caribbean nation. Although this extension reflects short-term strategic relief, uncertainty about future renewals has stirred international markets and raised questions about the economic dynamics and stability of both countries.
For decades, oil has been the cornerstone of relations between the United States and Venezuela. However, political and economic tensions in recent years have led to considerations of a scenario in which the U.S. stops buying oil from the South American nation. To assess the implications of such a decision for both countries, it is necessary to examine other policies of the Trump administration and even the technical characteristics of Venezuelan crude.
Will Trump Continue Buying Venezuelan Oil?
At a press conference on January 31, Donald Trump reaffirmed his stance against allowing oil purchases from Venezuela, an intention he had expressed 10 days earlier, just hours after his presidential inauguration. The argument is that buying crude from a regime led by Nicolás Maduro, whom he considers illegitimate, would strengthen Maduro’s leadership.
Since his first term (2017-2021), Donald Trump implemented a series of sanctions against the Maduro government, including those imposed on the state oil company PDVSA, aimed at reducing Caracas’ revenue to exert political pressure. Despite these measures, and also under the administration of Joe Biden (2021-2025), the U.S. continued importing Venezuelan oil due to the specificities of the crude and the country’s energy needs.
In October 2023, Joe Biden lifted some sanctions on Venezuela’s energy sector following agreements between Maduro’s administration and the Venezuelan opposition to hold presidential elections. The six-month license would allow Maduro’s government to earn an additional $740 million from oil sales, according to Eduardo Fortuny, director of Dinámica Venezuela, in statements to Bloomberg. Sources consulted by Reuters also indicated that restricted licenses for companies like Repsol, Eni, Maurel & Prom, and Shell would be extended to continue operating in Venezuela.
After the electoral process in July 2024, in which the National Electoral Council declared Nicolás Maduro the winner—amid widespread allegations of fraudulent vote counts—the Venezuelan leader revealed a document about a secret agreement signed in Qatar a year earlier with the U.S. government. The agreement revealed that the Biden administration negotiated with Maduro the removal of most sanctions once the winner assumed the presidency, along with the restoration of full diplomatic relations.
Although the document, published on Maduro’s X account, did not include the signature of the U.S. representative, and the White House did not respond to requests for confirmation of its authenticity from El Nuevo Herald, it shows how far the Biden administration was willing to go. Among the measures would be the release of all Venezuelan government assets frozen in the U.S. and the removal of all sanctions, including those applied individually under an executive order.
“I was very surprised to see that Biden agreed to buy a large amount of oil from Venezuela, because Venezuela was on the verge of getting rid of the dictator. And when that happened, he revived it,” said Donald Trump, criticizing his predecessor’s policies. However, despite stating that he “would not allow something so stupid to happen again,” Trump assigned his presidential envoy for Special Missions, Richard Grenell, the task of visiting Venezuela to discuss essential matters.
The meeting between Grenell and the Venezuelan government on January 31 concluded with the release of six detained U.S. citizens and an apparent agreement for Venezuela to receive illegal migrants captured in U.S. territory. A day after the meeting, the six-month extension of Chevron’s special license to continue its crude production operations in Venezuela was announced. Although it is important to note that this license is automatic, its continuity had been under threat.
This apparent contradiction reflects the complexities of foreign policy and the economic considerations at play. However, the situation is complex, and the evolution of a potential suspension of crude purchases from Venezuela will depend on geopolitical dynamics and the ability of both parties to maintain their positions in a scenario of constant confrontation.
A complete halt in imports could have significant impacts on U.S. refineries specifically designed to process Venezuelan heavy crude. Additionally, countries like Russia and China have increased their influence in Venezuela, which could motivate the U.S. to maintain some level of trade relations to counter this situation.
Harry Sargeant III: A Key Figure in Business Lobbying
According to the Miami Herald, the meeting between Grenell and Maduro was facilitated by Harry Sargeant III, an influential Florida businessman with close ties to the Republican Party and commercial interests in Venezuela’s oil and asphalt sectors. Sargeant reportedly led efforts by a group of U.S. oil businessmen who, since Trump’s electoral victory in November, had been trying to convince him of the advantages of reaching an agreement with Maduro, in which the latter would accept receiving deportation flights.
Sargeant has played a significant role in importing Venezuelan asphalt to the U.S., a crucial component for the construction industry. Venezuelan asphalt is valued for its quality and specific properties that meet U.S. infrastructure needs.
In January 2025, Venezuelan exports of AC-30, a type of asphalt cement, reached 525,000 barrels, a 112% increase from the 243,000 barrels exported in December, according to a report from the Paraguaná Refining Center operated by PDVSA. This situation gains additional relevance because, although Harry Sargeant III has his own license for his asphalt business, Chevron’s renewed license is particularly important for him, as it demonstrates the U.S.’s willingness to continue granting these concessions.
Oil experts Evanan Romero and Juan Fernández, former PDVSA officials, downplayed Sargeant’s role in organizing the meeting between Grenell and Maduro in statements to Diario Las Américas. However, the Florida businessman exemplifies how individual trade relationships can influence strategic sectors and how government policies can have repercussions beyond expectations.
A tightening of sanctions and trade restrictions could affect the flow of AC-30, impacting construction projects and road maintenance in the U.S. While it is understandable that U.S. investors need permits to operate in Venezuela, clear rules in agreements between the U.S. and Venezuela are also crucial, as uncertainty is a risk no entrepreneur wants to take.
Tariffs on Canada and Mexico: Reshaping the Oil Market
In addition to hinting at a ban on oil purchases from Venezuela, Trump announced that he would impose a 25% tariff on goods exported from Canada and Mexico to the U.S., including gas and oil, except for Canadian oil, which would face a 10% tariff.
Despite the decision to delay the implementation of these measures until March 4, Donald Trump announced on February 24 that the tariffs remain on the table. The postponement was agreed upon after both countries accepted stricter border controls to curb migration and drug trafficking.
The measure has strained relations with both countries, which have traditionally been U.S. energy trade partners. The tariffs could also negatively impact the economies of Canada and Mexico, which heavily depend on oil and gas exports to their northern neighbor.
China and India: Key Players in the Scenario
China had also denounced the Trump administration’s imposition of a 10% tariff on its exports to the U.S. China’s Ministry of Commerce stated that Trump’s measure “seriously violates” international trade norms and urged the U.S. to “engage in frank dialogue and strengthen cooperation.”
In response, China’s Ministry of Finance announced a 15% tariff on U.S. coal and liquefied natural gas, and a 10% tariff on crude oil, agricultural machinery, high-displacement vehicles, and pickup trucks.
In this context of tariff disputes between the U.S. and China, it is relevant to note that Chinese state refineries, including ChemChina and PetroChina’s Guangdong Petrochemical, imported a total of 865,000 metric tons (5.5 million barrels) of Venezuelan crude following the lifting of sanctions by Biden in 2023, according to S&P Global data.
However, PetroChina Guangdong Petrochemical, one of the main buyers of Venezuelan crude during this period, has also decided to refrain from purchasing more shipments once sanctions are reinstated.
These decisions reflect the complexity of the geopolitical and trade scenario, where unilateral actions by the U.S., such as imposing tariffs and renewing sanctions, have significant repercussions on global crude import and export dynamics.
On the other hand, the trade relationship between Venezuela and India in the oil sector has been significant, especially in the context of U.S. sanctions. Venezuelan state oil company PDVSA and India’s Reliance Industries resumed offshore crude exchanges last December, an agreement that had been suspended due to U.S. sanctions.
This resumption, authorized by a U.S. license in July 2024, represents a cautious step forward for both parties, although experts consulted by EFE warn that it is too early to celebrate.
Although Venezuela also supplied large quantities of crude to China and Russia, India was the main source of foreign currency for the South American country, as it paid cash for PDVSA shipments. Historically, Venezuela was India’s third-largest oil supplier.
The resumption of crude exchanges between PDVSA and Reliance Industries reflects the complexity of the current geopolitical scenario. While the U.S. maintains a firm stance on limiting trade in Venezuelan oil, India seeks to diversify its supply sources to ensure energy security, with access to heavy and economical crude that its refineries are equipped to process.
Impact on Both Countries
The cessation of oil trade between Venezuela and the U.S. would have profound implications for both countries, affecting their economies and geopolitical relations.
In Venezuela’s case, the country has historically depended on oil exports as its main source of income. According to Reuters, in 2024, Venezuelan oil exports increased by 10.5% despite political instability.
The loss of the U.S. market, which represented a 60% year-on-year increase in November 2024, according to the latest data from the U.S. Energy Information Administration, would be a devastating blow to Venezuela’s economy. Reduced export revenue could worsen the economic and social crisis already facing the country.
Venezuela’s oil production has shown signs of recovery, surpassing one million barrels per day for the first time since June 2019, according to EFE. However, uncertainty about Chevron’s and other international oil companies’ licenses, along with U.S. sanctions, complicates the situation.
Recently, during a visit by Venezuela’s Vice President and Minister of Hydrocarbons, Delcy Rodríguez, to India for its Energy Week, she intervened in a meeting attended by the Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), calling the idea of excluding Venezuela from the global oil market “absurd,” as it would limit export opportunities and economic development.
For the U.S., there would also be significant implications, as it has been a major buyer of Venezuelan heavy crude, essential for certain refineries on its territory. The interruption of Venezuelan supply would force the U.S. to seek alternatives in other markets, potentially increasing refining costs and affecting energy supply stability.
Moreover, the costs of opening a new well are significantly lower in Venezuela compared to the main geological formations in the United States. According to estimates by petroleum geologist Christopher Roy Luck, a new well in the Orinoco Oil Belt would cost between USD $15 and $19 per barrel, while in the Permian Basin it would range from $18 to $25, in Bakken from $23 to $27, and in Eagle Ford from $23 to $33. Only in Canada would it be cheaper, thanks to more advanced technologies, which could be replicated in Venezuela, given that it involves a similar heavy crude.
Of course, the cessation of oil trade would also have geopolitical implications. The U.S. decision to stop buying oil from Venezuela is a pressure measure to weaken the Nicolás Maduro regime. However, this move could push Venezuela to strengthen its relations with other countries like China and Russia, which are already significant energy trade partners.
