On March 4, the United States issued a directive for energy giant Chevron to halt its operations in Venezuela within 30 days, delivering a significant blow to the financially struggling authorities in Caracas. Chevron, which currently produces and exports nearly a quarter of a million barrels of crude oil daily from Venezuela, provides essential revenue for President Nicolas Maduro’s government.
The US Treasury Department’s decision to impose the 30-day deadline has been described by industry insiders as unrealistic. This move marks a dramatic shift in President Donald Trump’s policies towards Venezuela, a long-time adversary of the US. During his first term, Trump pursued a “maximum pressure” strategy against the leftist regime, implementing sanctions and restricting US oil companies’ operations.
However, upon returning to office, Trump initially sought to engage with Maduro, approving a deal to secure the release of US citizens in exchange for Caracas accepting migrant deportees from the US. A Trump envoy even posed for photographs with a smiling Maduro in Caracas. This move sparked intense pressure from Florida Republicans who advocate for US support of pro-democracy parties that have faced repeated setbacks in questionable elections.
Facing a challenging budget vote in Congress, Trump abruptly reversed his stance in February, stating that Venezuela had failed to hold fair elections as promised and was not adhering to the deal. Experts warn that the loss of Chevron-linked exports could lead to a recession in Venezuela and an increase in the number of people fleeing the country. For Maduro, the cessation of Chevron’s operations would result in a loss of approximately $150 million to $200 million per month in foreign reserves.
Venezuelan Vice-President Delcy Rodriguez criticized the US government’s decision, calling it a “self-inflicted blow” that would raise fuel prices and harm the Venezuelan people. Despite the news, oil markets remained stable, as it coincided with a decision by OPEC to increase production. Chevron’s share price, however, has dropped by about 2.8% over the past week.
Venezuela, once a major oil producer with an output of 3.5 million barrels per day, now produces just over one million barrels daily, despite having the world’s largest oil reserves. Between 2014 and 2021, Venezuela’s GDP plummeted by 80%, partly due to low oil prices and stringent US sanctions. European firms Eni, Repsol, and Shell, which also operate in Venezuela, were not affected by the US action.