President Donald Trump revoked a license granted to Chevron by his predecessor, Joe Biden, two years ago. Trump announced the decision in a late Wednesday post on Truth Social.
The decision comes as Trump accuses Venezuelan President Nicolás Maduro of failing to make the necessary headway on election changes and migrant returns.
This dramatic shift in energy strategy indicates a renewed focus on Venezuela, underscoring Trump’s harsh position against Maduro’s administration.
Details of the revocation
Trump framed the move as overturning earlier agreements linked to an “oil transaction agreement” signed on November 26, 2022.
While the president did not specifically referred to Chevron in his remarks, it was known that the Biden administration had approved Chevron to operate in Venezuela’s oil industry on that day.
This was the sole permission provided by Washington to Venezuela on a delicate geopolitical subject involving oil supply and human rights.
Venezuelan Vice President Delcy Rodríguez reacted strongly to Trump’s statement, stating that, “The US government has made a damaging and inexplicable decision.”
She maintained that such actions add to Venezuela’s escalating migratory dilemma, which is directly linked to US sanctions and trade restrictions.
Implications for Venezuela’s oil output
Chevron’s operations in Venezuela, which include the daily production of about 240,000 barrels of oil — a key link in the country’s oil supply chain — are at risk with this reversal.
This accounts for more than a quarter of Venezuela’s entire oil production. The move may cripple the already fragile Venezuelan economy.
Chevron cannot purchase previously exported oil from Venezuela’s national oil company PDVSA due to US sanctions that prevent US refineries from purchasing it.
US sanctions on PDVSA pose a severe challenge for the energy market and Venezuela, potentially worsening the country’s already dire economic situation.
According to Reuters, Chevron also confirmed Trump’s comments and said it was currently evaluating the impact of this policy change.
Implications of Trump’s energy policy
After taking office in January, Trump has repeatedly said Venezuelan oil is not a necessity for the United States.
During the first term, he embraced a “maximum pressure” campaign against Maduro’s government, focused mainly on sanctions designed to cripple Venezuela’s energy industry.
On Wednesday, US Energy Secretary Chris Wright again called the United States the largest oil producer in the world.
Small-scale disruptions from other countries, he said, “would not mean a lot to the world oil supply,” and would not produce a significant effect on the global market.
In early February, Trump stated that he had reached an agreement with Caracas to return Venezuelans to their home country as part of his campaign against illegal migrants in the US.
However, Trump did not specify the requirements, leaving room for interpretation and debate.
Analyzing Trump’s announcement on Venezuela’s oil license
Francisco Rodriguez, a Venezuelan oil specialist and professor at the University of Denver, commented on X about Trump’s announcement.
He stated that the news principally concerns General License 41, which permits Chevron to operate in Venezuela.
However, Rodriguez added that General License 41 remains active on the OFAC website and has not been revoked.
As long as it’s still listed, it remains legally valid.
He added that the decision comes as Congress negotiates the reconciliation bill, a crucial factor in securing Trump’s approval for his budget and preventing a government shutdown or a potential debt ceiling crisis.
Meanwhile, Florida legislators opposing the licenses are pushing for the cancellation of License 41 as a condition for backing the project.
This dynamic gives Trump a strong incentive to take a firm stance against Maduro, at least in the short term.
Nonetheless, despite the political machinations, the license is designed to stay in existence for six months after its previous renewal, providing a buffer for Chevron’s activities.
Rodriguez stated that, while the US president has the right to terminate any transaction with Venezuela under the International Emergency Economic Powers Act (IEEPA), the absence of rapid action to remove the license shows strategic planning.
A plausible possibility is that the US would revoke the license discreetly on March 1 to gain support from Florida legislators while still giving Chevron time to negotiate new arrangements before the license expires in August.
This approach may explain the Venezuelan government’s mild reaction, which would have been more forceful if they felt the cancellation was imminent.
Chevron’s license cancellation reinforces the uncomfortable relationship between the US and Venezuela.
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