(Bloomberg) -- President Donald Trump said he plans to revoke Chevron Corp.’s oil license to operate in Venezuela, threatening to torpedo the nation’s slow economic recovery.
The US president referred to a concession agreement from November 2022, which would match the date that Chevron was granted a license to produce and sell oil in Venezuela despite sanctions against Nicolás Maduro’s authoritarian government. Under the terms of the license, Chevron would have a six-month wind-down period to exit Venezuela.
“We are hereby reversing the concessions that Crooked Joe Biden gave to Nicolás Maduro, of Venezuela, on the oil transaction agreement,” Trump wrote in a social media post. He cited the electoral conditions in Venezuela and the country’s failure to take back migrants from the US as quickly as it promised.
The move represents an intensification of US restrictions on the South American nation after Maduro’s contested reelection and a sweeping crackdown on his opponents. And Trump is promising to hit where it hurts most: the economy, at a time when almost 80% of citizens say they feel frustrated and disappointed after Maduro’s inauguration last month, according to pollster Meganalisis.
Late Wednesday, Secretary of State Marco Rubio said in a post in X that he will provide “foreign policy guidance” to “terminate all Biden-era oil and gas licenses that have shamefully bankrolled the illegitimate Maduro regime.”
Maduro’s officials blasted Trump’s move. “The United States government has made a harmful and inexplicable decision to announce sanctions against the American company Chevron,” Venezuela Vice President and Oil Minister Delcy Rodriguez said in a statement. Instead of hurting the Venezuelan people, Washington is causing “damage to the US, its people and its companies.”
Chevron is the only US oil major left in Venezuela and serves as a vital lifeline, having helped tame runaway inflation in recent years. The company’s oil production, which is operated through joint ventures with state-controlled Petroleos de Venezuela SA, totaled more than 200,000 barrels a day as of mid-2024. It accounts for about 20% of the oil-rich nation’s production and has helped boost overall output above 1 million barrels a day.
“We are aware of today’s announcement and are considering its implications,” Chevron spokesperson Bill Turenne said by email. “Chevron conducts its business in Venezuela in compliance with all laws and regulations, including the sanctions framework provided by US government.”
The US government has allowed a few other oil majors to keep buying and producing Venezuelan crude, including Reliance Industries Ltd. of India, Repsol SA of Spain and France’s Maurel & Prom. Trump’s pronouncement raises questions about their ability to continue their operations.
If Trump actually follows through — and isn’t just using the threat as a negotiation tactic — it could cut Venezuela’s overall production by 100,000 barrels per day, according to Francisco Monaldi, director of the Latin American energy policy at Rice University’s Baker Institute for Public Policy in Houston. And other foreign oil producers may follow suit.
“Venezuela might see its revenues decrease by the void of barrels sold at US refineries at market price rerouting to the Asia market with discount,” Monaldi said. “But it could compensate this by taking all of Chevron’s shares of their production.”
Trump has been telegraphing the revocation of the license for weeks, with both the president and Rubio indicating Chevron’s operating license was under review.
It also dovetails with his repeated, confident assertions that the US is so rich in oil and gas bounty that it doesn’t need to rely on foreign supplies, whether from North American allies or Venezuela. The president has promised to “drill, baby, drill” and entice oil companies to tap more of what he calls the “liquid gold” under US soil.
Yet oil exports from Venezuela have been seen as helping blunt the potential impact of Trump’s promised tariffs on Canadian and Mexican crude, currently on hold until early March. And even without immediate new levies on Canadian crude, removing Venezuelan supplies could act to boost domestic energy costs, running counter to the president’s bid to tame inflation and pare fuel prices.
The US imports about 250,000 barrels a day of Venezuelan crude, mostly for refineries on the Gulf Coast. Valero Energy Corp., the third-biggest US fuelmaker, was the top user of Venezuelan oil at the end of 2024, followed by Chevron, which uses the crude in its own refineries as well as sells it to others.
By granting the waiver to Chevron in 2022, then-US President Joe Biden sought to pressure Maduro into democratic reforms and increase the flow of oil to US refineries at a time when US gas prices were at record highs.
Chevron — having endured political convulsions, military coups, civil unrest and economic collapse in its century-long history in Venezuela — is a little more shielded.
It removed its Venezuelan assets from its reserves given the uncertainties around the sanctions waiver. That means the country’s production doesn’t contribute to earnings and is not included in the company’s financial forecasts.
Its shares fell less than 1% in New York after Trump’s post.
Meanwhile, dollar bonds from Venezuela and PDVSA fell to session lows on the announcement, according to indicative pricing data collected by Bloomberg.
Chevron’s joint ventures with Venezuela’s state producer are estimated to have contributed some $4 billion in tax payments over the past two years, representing about a quarter of the regime’s total revenue over the same period, according to Ecoanalítica, a Caracas-based consultancy. They have been a driving force behind the uplift in Venezuela’s economy, which is on track to grow 9% this year.
Canceling the license may prove more complicated for Trump than first thought.
Operational control over Chevron’s joint ventures is likely to pass to PDVSA, which in turn could flow revenues back to Maduro.
Further, the dollars Chevron generates from rising oil production stay within Venezuela and mostly get reinvested in local currency through private banks, which then lend to local companies to boost the economy — all out of the clutches of Maduro’s government.
An end to this source of private revenue may see inflation return, which could increase migration over the long-run.
Venezuela opposition leader María Corina Machado — who Maduro banned from running in last year’s election — appeared Wednesday evening on Donald Trump Jr.’s podcast.
She commended the US president’s decision to revoke Chevron’s license, saying the oil major provided “billions of dollars” that “Maduro has used for repression, persecution and corruption.”
She said it showed that Maduro was in “big” trouble.
Analysts, however, suggest the move could still just be a negotiating tactic.
“I never bought into the idea of Maduro becoming Trump’s best friend,” said Alejandro Arreaza, an economist at Barclays in New York. “The American government is using a good-cop-bad-cop strategy and now the bad cop is coming out to ratchet up pressure.”
(Updates with Rubio comment in 5th paragraph.)
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