Trump Revokes Chevron's Venezuela Oil License, Cutting Financial Lifeline to Maduro Regime
President Donald Trump announced that he would revoke Chevron's authorization to produce and export oil from Venezuela, terminating a crucial financial lifeline for President Nicolás Maduro's government. The license, granted initially by the Biden administration in 2022, will expire on March 1, 2025, forcing Chevron to wind down operations that account for approximately 240,000 barrels per day—over a quarter of Venezuela's oil output. Trump cited Maduro's failure to meet democratic conditions in last year's presidential election and insufficient cooperation in accepting deported Venezuelan migrants as reasons for the decision.
A Major Shift in U.S.-Venezuela Relations
"We are hereby reversing the concessions that Crooked Joe Biden gave to Nicolás Maduro of Venezuela on the oil transaction agreement," Trump declared in a post on Truth Social. He specifically criticized the Maduro regime for not repatriating "violent criminals" at the "rapid pace that they had agreed to."
While Trump did not explicitly name Chevron in his announcement, his description of a waiver from Venezuela sanctions matches the U.S. major's authorization date and terms. The license, issued in November 2022, allowed Chevron to resume cargo loadings from Venezuela for import into the United States as part of a deal to encourage free elections in the South American nation.
Chevron acknowledged the announcement briefly: "We are aware of today's announcement and are considering its implications. Chevron conducts its business in Venezuela in compliance with all laws and regulations, including the sanctions framework provided by the U.S. government."
Economic Impact on Venezuela and Global Oil Markets
The revocation of Chevron's license represents a significant blow to Venezuela's struggling economy. The joint ventures between Chevron and Venezuela's state-owned oil company PDVSA have been producing approximately 240,000 barrels per day, accounting for more than 25% of the country's entire oil output.
The license has provided a steady source of revenue to Maduro's administration since early 2023. According to Jose Ignacio Hernandez from consultancy Aurora Macro Strategies, the government take from oil activities covered by all U.S. licenses, including Chevron's, is estimated between $2.1 billion and $3.2 billion annually, considering only royalties and taxes.
Venezuela's opposition has estimated that Maduro's government has received about $4 billion through the permit since it was issued.
Oil markets reacted to the news with modest price increases. According to data from early Thursday trading, Brent crude oil futures rose 24 cents or 0.33% to $72.77 a barrel, while U.S. West Texas Intermediate crude oil futures were up 18 cents or 0.26% at $68.80 per barrel.
Venezuela's Political Context
The license revocation comes amid ongoing political tensions in Venezuela. Maduro was sworn in last month for a third consecutive six-year term despite credible evidence that his opponent, Edmundo González, received more votes in the July 2024 election. The U.S. government does not recognize Maduro as the legitimate president of Venezuela.
Venezuela's Vice President Delcy Rodriguez described Trump's announcement as "harmful and inexplicable," saying it abruptly dashed hopes for improved relations with the White House after a Trump envoy visited Caracas on February 1. Shortly after this visit, Venezuela began accepting the return of migrants deported from the U.S.
Opposition leader Maria Corina Machado, speaking during a podcast with Donald Trump Jr., welcomed the decision: "This is a significant development, sending a clear and firm message that Maduro is in serious trouble." Machado accused Maduro of misappropriating funds from oil sales for "repression, persecution, and corruption."
Historical Context and Sanctions Policy
Trump's decision marks a return to the "maximum pressure" sanctions policy he pursued against Maduro's government during his first term, mainly targeting Venezuela's energy business.
The Biden administration issued the license in 2022 after Maduro committed to collaborating with Venezuela's political opposition to facilitate a democratic election. However, after the disputed July 2024 election, Biden reinstated broad oil sanctions in April, saying Maduro failed to keep his electoral promises. Despite this, Biden had left the Chevron license intact, and U.S. authorizations were granted to several other foreign oil companies.
Venezuela possesses the largest proven oil reserves globally and once leveraged them to sustain the most robust economy in Latin America. However, corruption, mismanagement, and U.S. sanctions have led to a continuous decline in oil production.
Implications for Chevron
The license revocation represents a significant setback for Chevron, which first invested in Venezuela in the 1920s. The company operates in Venezuela through joint ventures with PDVSA. These joint ventures produced around 200,000 barrels of oil per day in 2019, but U.S. sanctions imposed by Trump's administration in 2020 forced Chevron to scale back its production.
After receiving the license to export oil to the U.S. in November 2022, production from these ventures surged to 80,000 barrels per day, exceeding the daily output levels from 2019 by 2024.
When the license was first issued, Venezuela owed Chevron about $3 billion. According to the company's debt recovery plan, by the end of 2024, it should have recouped some $1.7 billion as oil output approached an average of 200,000 barrels per day as expected.
The license prohibits Chevron from directly paying taxes or royalties to the Venezuelan government, but the company transfers funds to the joint ventures that PDVSA predominantly owns.
Chevron CEO Mike Wirth, speaking about the situation in Venezuela last month, emphasized the company's commitment to employee safety and adherence to regulations: "We don't dictate policy. We interact with the government to help them understand the possible repercussions of policy decisions, and we will keep doing that."
Humanitarian Implications
Since 2013, when Maduro took office and the oil-reliant economy collapsed, over 7.7 million Venezuelans have fled the country. Most have relocated to Latin America and the Caribbean, but many have increasingly aimed for the U.S. following the pandemic.
The revocation of Chevron's license could worsen Venezuela's economic situation, potentially leading to increased migration. However, U.S. Energy Secretary Chris Wright downplayed the impact on global oil supply, noting that the U.S. is the world's largest oil producer and "small interruptions from other nations" will not affect global supply.
Future Perspective
As the March 1 deadline approaches, questions remain about what will happen with cargoes of Venezuelan crude currently navigating to U.S. ports or about to depart from Venezuela through the end of the month.
Under the license terms, Chevron would have a six-month wind-down period to exit Venezuela, meaning the company would need to gradually reduce its operations in the country.
The decision represents a significant shift in U.S. policy toward Venezuela and could have far-reaching implications for both countries. For Maduro's government, the loss of revenue from Chevron's operations could further strain an already struggling economy. For the U.S., the move signals a return to a harder line on Venezuela, potentially complicating efforts to address migration issues and regional stability.
As Venezuela's Vice President Rodriguez warned, decisions like Wednesday's have led to "well-known effects" in the past, suggesting the potential for increased economic hardship and political tensions in the region.