US authorities have given Chevron until April 3, 2025, to wind down its operations in Venezuela, in accordance with instructions from President Donald Trump. This decision by the Office of Foreign Assets Control (OFAC) marks a tightening of sanctions against the government of Venezuelan President Nicolás Maduro. The primary aim of the measure is to restrict revenue from oil sales while exerting pressure on the country’s economy, which holds the world’s largest proven oil reserves. Chevron, the only American oil company still operating in Venezuela, will be required to halt its activities and joint ventures with the state-owned oil company PDVSA (Petróleos de Venezuela, S.A.).
This new ban, which takes effect on March 4, 2025, imposes strict restrictions, including prohibiting Chevron from paying taxes or dividends to PDVSA or any entity in which the company holds a majority stake. Moreover, the American firm will no longer be allowed to sell oil or petroleum products to countries other than the United States. The sanctions also aim to limit dealings with companies controlled by Russian entities, as well as transactions with individuals who have been subject to US sanctions. These measures follow those introduced by the Biden administration in November 2022, but with strengthened restrictions.
Venezuela is heavily reliant on its oil sector to finance its economy. Chevron, which contributes nearly 25% of the country’s oil production, is responsible for about one-quarter of the one million barrels per day (b/d) extracted from Venezuela’s oil fields. According to economist Asdrúbal Oliveros, this decision could have a major macroeconomic impact on the country’s oil production and economy, which have already been severely affected by international sanctions.
Impact on the Venezuelan economy and global market
The Venezuelan government has warned that this decision will have repercussions both for Caracas and for the United States. Vice President and Minister of Hydrocarbons, Delcy Rodríguez, stated that the measure would lead to a rise in global fuel prices, due to the potential decrease in oil supply from Venezuela. She also highlighted that American companies operating internationally could see their investments impacted due to the increased uncertainty brought about by these sanctions.
If Chevron ceases its operations, it could have a domino effect on the global oil industry, which is already struggling to meet growing demand and deal with geopolitical tensions. A halt in Venezuelan production will likely tighten global oil markets, which could, in turn, impact pump prices. However, some analysts believe that the effects will be limited in the short term, given the ongoing efforts to diversify oil suppliers in the region.
International reactions
Other oil companies operating in Venezuela, such as Spanish firm Repsol and French company Maurel & Prom, could also come under pressure if US sanctions are extended. While these companies are not directly affected by the decision regarding Chevron, they may face additional hurdles in their dealings with the Maduro government, particularly if further international sanctions are imposed.
This situation reflects a broader context of geopolitical tensions that are influencing global energy markets, especially due to sanctions related to the war in Ukraine and the rise of alternative oil producers. US energy policy continues to play a key role in shaping global oil markets, with notable effects on prices and the economic stability of countries like Venezuela.
