A sweeping U.S. decision to revoke oil licenses in Venezuela is sending shockwaves through the energy sector and beyond. In late March 2025, Washington abruptly pulled permissions that had allowed several foreign companies to pump and export Venezuelan crude despite sanctions. The move – targeting firms like Chevron, Repsol, Eni, Maurel & Prom, and Reliance Industries – is poised to rattle Venezuela’s fragile economy, alter geopolitical calculations, and tighten global oil supplies.
At the Heart of the Storm: The license cancellations mark a sharp turn in U.S. policy. Just a year earlier, under then-President Joe Biden, limited sanctions relief let Venezuela boost oil output and foreign partners repatriate crude. But with President Donald Trump back in office, Washington has reversed course. Citing irregularities in President Nicolás Maduro’s 2024 reelection and a lack of promised reforms, the Trump administration is reimposing hardline measures. Trump accused Maduro of stalling on fair elections and failing to facilitate migrant returns, and vowed the U.S. “will no longer buy oil from Maduro”. In line with that pledge, Trump declared a 25% tariff on any country buying Venezuelan oil or gas, effective April 2. This combination of tariffs and license revocations aims to “strangle Venezuela economically”, cutting off cash flows that have kept the Maduro government afloat.
Oil Majors Forced to Wind Down Operations
The license cancellations abruptly halted operations for several international energy firms that had been lifelines for Venezuela’s oil industry under sanctions. Chevron, the last major U.S. oil company in Venezuela, was told its authorization to operate – granted in late 2022 – would be terminated. In early March, the U.S. Treasury ordered Chevron to wind down its Venezuela oil production and exports within 30 days. While Trump later gave a brief reprieve – extending Chevron’s deadline to May 27 – the message was clear: Chevron’s time in Venezuela is up. The company, which had pumped about 220,000 barrels per day (bpd) via joint ventures with state-run PDVSA, said it would comply with U.S. directives. For Chevron, this not only means pulling out staff and scaling down wells, but also jeopardizes its debt recovery strategy – it had relied on oil exports to the U.S. to recoup billions owed by PDVSA.
European partners are in the same boat. Spain’s Repsol and Italy’s Eni, which received U.S. “comfort letters” in 2022-2023 to take Venezuelan oil (and even gas-for-oil swaps) as debt payment, confirmed they were notified of license revocations. Repsol – responsible for an estimated 65,000 bpd of output in Venezuela – said it is in “open and fluid dialogue” with U.S. authorities to explore options going forward. Spain’s foreign minister José Manuel Albares vowed to defend Repsol’s interests after the notification. Eni, which has helped develop Venezuelan gas and received crude cargoes in return, can no longer collect oil as payment for its gas production, according to a company statement.
From France, Maurel & Prom (M&P) announced Washington revoked the special license it had obtained in May 2024 for its 40% stake in the Petroregional del Lago joint venture. M&P, a mid-sized firm, produced around 20,000 bpd in Venezuela. News of the loss sent its stock tumbling 15% on the Paris exchange. “It is M&P’s understanding that this action is part of a broader OFAC initiative affecting both U.S. and international oil companies in Venezuela,” the firm said, adding it was assessing legal implications.
Even India’s Reliance Industries, operator of the world’s largest refining complex, has been indirectly caught in the fray. Reliance had obtained U.S. clearance to import Venezuelan crude – averaging about 2 million barrels per month – as a debt repayment mechanism. But with Trump’s new 25% tariff on Venezuelan oil buyers, Reliance will halt those imports entirely. Other buyers from China to Italy have likewise scaled back or stopped purchases to avoid punitive tariffs and sanctions.
Venezuela’s Economy Braces for a Hit
For Venezuela’s oil-dependent economy, the implications are dire. Oil is the lifeblood of the nation, accounting for roughly 90% of export income. After years of mismanagement and earlier sanctions, Venezuela’s output had only recently clawed back to about 900,000 bpd – a fraction of the ~3 million bpd it produced in the late 1990s. Now, the loss of foreign partners threatens to reverse those modest gains. Joint ventures involving Chevron, Repsol, Eni and others make up nearly 40% of current production. Rafael Quiroz Serrano, a veteran oil economist at Central University of Venezuela, warns that without these partners “there is no one to replace these companies, which will inevitably lead to a decline in output”. PDVSA lacks the cash and equipment to maintain, let alone expand, the operations that international firms were running.
Early forecasts are bleak. Ecoanalítica, a Caracas-based consulting firm, projects Venezuela’s oil sector will contract by 20% in 2025, dragging overall GDP down 2–3%. Oil exports – which had crept up above 850,000 bpd earlier this year – could fall by 30–50% in the next 12 months, the firm estimates. That means far less foreign currency coming in to prop up the bolívar. The likely result: a renewed bout of inflation and currency depreciation, worsening hardships for ordinary Venezuelans. Fuel shortages could also intensify. Even with Chevron’s help, Venezuela has struggled to meet domestic gasoline demand. A sudden production decline will “make fuel more scarce and the economy weaker”, as Caracas Chronicles put it.
Maduro’s government, for its part, is putting on a brave face. Vice President Delcy Rodríguez blasted the U.S. measure as a “new aggression,” yet insisted Venezuela was prepared. She said the affected companies had been in “fluid communication” with Caracas and were “notified in recent hours” of the U.S. action. In a statement, Rodríguez invited those firms to continue working in Venezuela under new terms, touting a possible “win-win scheme” with the national industry despite the license revocations. How such arrangements might work remains unclear, but experts note they could involve pure service contracts that don’t violate sanctions. Still, Maduro’s administration admits it anticipated this scenario and vows to keep the oil flowing one way or another. “We were prepared for this,” Rodríguez said, stressing that Venezuela will honour its contracts and seek other buyers where it can.
Geopolitical Undercurrents and Global Reactions
The clampdown on Venezuelan oil is rooted in high-stakes geopolitics. Trump’s hardline stance comes after international observers flagged Maduro’s 2024 election as fraudulent. In response, Washington is trying to pressure Maduro back to the negotiating table – or simply squeeze him from power – by cutting off oil revenues. The U.S. also tied its actions to illegal migration, invoking an emergency law to deport Venezuelan nationals deemed security risks. Trump alleges Venezuela’s government “sent tens of thousands” of violent criminals to the U.S., a claim echoing his domestic political agenda. By revoking oil licenses, the administration signaled there would be consequences for not meeting U.S. demands on both elections and migrant returns.
Unsurprisingly, Caracas decried the move as economic warfare. In a fiery press release, Maduro’s government “firmly and categorically rejected” the new sanctions, calling them “arbitrary, illegal, and desperate”. Officials insist U.S. sanctions have “resoundingly failed” to topple Maduro. They argue that Venezuela has proven resilient, finding ways around sanctions through allies like China, Russia, and Iran. Over the last year, as some sanctions were eased, Venezuela’s oil revenues had jumped, helping a nascent economic recovery. Now, with restrictions tightened again, Caracas accuses Washington of deliberately sabotaging that recovery and punishing the Venezuelan people.
Allied nations have also voiced concern. China’s foreign ministry slammed the U.S. for “grossly interfering in the internal affairs” of Venezuela. “China firmly opposes this,” said spokesperson Guo Jiakun, urging Washington to lift “illegal unilateral sanctions”. Beijing, a top buyer of Venezuelan crude, stands to lose a key heavy oil source – though it has alternatives in Iran and Russia. India, Spain, Italy, and Cuba, all importers of Venezuelan oil, now face hard choices as the U.S. demands they cut ties or pay steep tariffs. Within the U.S., the policy has drawn mixed reviews. Some analysts see it as necessary pressure on a dictatorial regime, while others worry it could push Venezuela closer to U.S. rivals. David Goldwyn, a former U.S. energy diplomat, noted the internal debate: the compromise policy of tariffs plus a Chevron wind-down “provides a sweet spot” between those wanting to oust Western firms from Venezuela and those fearing to enrich Maduro by leaving.
Impact on Global Oil Markets
The fallout in global oil markets from these moves has been immediate, if modest so far. Upon Trump’s announcement of a tariff on Venezuelan oil buyers, crude prices jumped roughly 1%, hitting a five-week high. Traders anticipated a drop in Venezuelan exports would tighten supplies, especially of heavy crude that many refineries need. However, the price spike was capped by news of Chevron’s short-term extension, which avoids an abrupt collapse of Venezuelan exports in April. In February 2025, Venezuela was exporting about 910,000 bpd of crude and fuel (up from 867,000 in January). Losing a significant chunk of that will necessitate reshuffling of supply chains for oil-importing nations. Refiners in India and southern Europe that rely on Venezuela’s tar-like crude may need to find alternative sources or face higher costs for similar grades from Canada or the Middle East.
One unintended beneficiary could be Russia. With Venezuelan oil under sanctions, analysts predict China and India may simply buy more Russian crude instead. “Why risk U.S. tariffs for Venezuelan oil when you can buy Russian?” is how Goldwyn framed the dilemma. Both Russia and Iran have previously helped Venezuela bypass sanctions – for instance, by swapping or diluting Venezuelan oil to disguise its origin. Those shadow channels might now expand further. Yet increased illicit flows come at a steep price: Venezuela often must sell its crude at deep discounts (sometimes 40% off) to entice buyers to skirt sanctions. That means Caracas earns far less per barrel than market rates, shrinking its overall oil income.
There is also the U.S. domestic angle. Some experts note that cutting off Venezuelan imports could nudge U.S. gasoline prices upward in the long run, since American refineries – especially on the Gulf Coast – have historically processed Venezuela’s heavy crude. The Maduro government seized on this point, arguing that Washington’s decision would “hit the U.S. the most” by raising fuel costs and discouraging U.S. companies from investing abroad. However, Trump officials downplay this, pointing out Venezuelan oil made up only about 3.5% of U.S. crude imports last year. They argue that America can easily replace that volume from other suppliers or domestic production. Indeed, U.S. oil output has been robust, though latest data showed a slight dip to an 11-month low in January.
Outlook: Uncertainty and High Stakes
As the dust settles from these license revocations, all parties are weighing their next steps. Oil companies are busy navigating exit plans – from safely shutting wells to shifting personnel – while hoping for any political reversal before May 27. Chevron has been tight-lipped, declining comment beyond affirming it will follow U.S. law. European firms, backed by their governments, may lobby Washington for exemptions or compensation. But if the standoff over Venezuela’s elections continues, a near-term reprieve appears unlikely. U.S. Secretary of State Marco Rubio hinted at even broader measures, saying new guidance was coming for all foreign oil firms in Venezuela.
For Venezuela, the loss of these partnerships is a heavy blow to an industry already on life support. Maduro is seeking alternative lifelines – perhaps deepening ties with countries like Iran (which has swapped condensate for Venezuelan oil), or courting investment from China and Russia despite the risks. The government insists it will “continue honoring contracts” and find creative ways to market its crude. How far those assurances go will be tested in the months ahead, as production numbers and export revenues start to reveal the true impact of Washington’s squeeze.
Ordinary Venezuelans, meanwhile, stand to feel the brunt if oil income dives – through a weaker currency, pricier imported goods, and scarcer fuel. In the global chessboard of oil and politics, Venezuela’s people have the most to lose from this gambit. Washington’s endgame is to force democratic change in Caracas; whether that succeeds or not, the immediate effect is a deepening of the country’s economic pain. As one Caracas oil expert lamented, “2025 will be even more challenging than expected”, with a sharper drop in production and revenues.
Neutral observers say the situation now hangs on diplomatic developments. A possible U.S.–Venezuela deal could still emerge if Maduro offers concessions on new elections, in which case some licenses might be restored. Until then, the licensing axe has fallen, leaving Venezuela’s oil future – and the fate of companies that bet on its revival – in a state of perilous uncertainty.
Sources
- Reuters – U.S. orders wind down of Chevron’s oil exports from Venezuela (Mar 4, 2025)
- Reuters – U.S. to revoke authorizations to foreign partners of PDVSA (Mar 29, 2025)
- Reuters – Trump to hit Venezuelan oil buyers with tariff, extends Chevron’s wind down (Mar 24, 2025)
- Reuters – France’s M&P, Spain’s Repsol say Venezuela oil licences revoked by US (Mar 31, 2025)
- The Economic Times/AFP – US revokes transnational oil, gas company licenses in Venezuela (Mar 31, 2025)
- Caracas Chronicles – How Chevron’s Exit Will Impact the Venezuelan Economy (Mar 19, 2025)
