On Wednesday, U.S. President Donald Trump announced the revocation of a license that allowed Chevron to operate in Venezuela, a license granted by his predecessor Joe Biden over two years ago. Trump cited the lack of progress on electoral reforms and the return of Venezuelan migrants as reasons for this decision.
Key Highlights:
Reversal of Concessions:
Trump stated he was “reversing the concessions” made in the “oil transaction agreement” dated November 26, 2022. Although he did not specifically mention Chevron, the license granted to the company on that date was the only one issued for Venezuela’s oil sector.
Venezuelan Government’s Response:
Venezuelan Vice President Delcy Rodriguez criticized the U.S. government’s decision, calling it “damaging and inexplicable.” She claimed such actions have led to increased migration from Venezuela.
Impact on Chevron’s Operations:
Chevron currently exports approximately 240,000 barrels per day of crude oil from its Venezuelan operations, which accounts for over a quarter of the country’s total oil output. The revocation of the license means Chevron will no longer be able to export Venezuelan crude.
Sanctions Context:
Trump’s administration had previously implemented a “maximum pressure” sanctions policy against Maduro’s government, specifically targeting the energy sector. Biden initially eased sanctions to encourage fair elections but reinstated broad oil sanctions after Maduro failed to fulfill electoral promises.
Economic Ramifications:
The revenue generated from Chevron’s operations has been vital for Maduro’s administration, contributing between $2.1 billion and $3.2 billion annually through taxes and royalties. This revenue has helped stabilize Venezuela’s economy, particularly in the oil and banking sectors.
Electoral Conditions:
In his announcement, Trump indicated that Maduro had not met “electoral conditions,” and he noted a lack of progress regarding the transportation of Venezuelan migrants back to their home country. The specifics of these “electoral conditions” were not detailed.
Political Reactions:
Opposition leader Maria Corina Machado praised Trump’s decision, asserting that it demonstrated his support for the Venezuelan people and their quest for democracy.
Future Uncertainties:
The cancellation of the license is set to take effect on March 1, with uncertainties surrounding the status of current cargoes of Venezuelan crude oil en route to U.S. ports.