Venezuela: Oil Sector Maintains Stability Ahead of Trump Policy Uncertainty
Caracas, January 15, 2025 (venezuelanalysis.com) – The Venezuelan oil industry has retained a steady output under continued constraints imposed by wide-reaching US sanctions.
The latest monthly OPEC report placed the Caribbean nation’s December production at 886,000 barrels per day (bpd), as measured by secondary sources. The figure is slightly higher than November’s 877,000 bpd and represents a 100,000 bpd rise compared to December 2023.
For its part, state oil company PDVSA reported a 998,000 bpd output in December, up from 960,000 bpd the prior month.
Venezuela’s crude and byproduct exports receded to 756,000 bpd last month from a five-year high of 974,000 in November. Oil exports rose by an average of 10.5 percent in 2024 compared to 2023. China remained the top destination for Venezuelan crude.
PDVSA likewise benefited from higher crude prices, with the country’s flagship Merey blend rising by 1.38 percent on average year-on-year.
Since 2017, the US has targeted Venezuela’s most important industry with several rounds of coercive measures, including financial sanctions, an export embargo and secondary sanctions. Washington intended to choke the country’s main source of revenue in order to trigger regime change.
Sanctions led output to plummet from nearly 2 million bpd in mid-2017 all the way to decades-lows around 350,000 three years later. The industry has gradually recovered but yet to surpass the 1 million bpd threshold.
In October 2023, the US Treasury Department issued General License 44 (GL44), a six-month waiver that effectively allowed Caracas to export crude without levying discounts or resorting to unreliable intermediaries. The Biden administration reimposed full-fledged restrictions in April 2024 over allegations that the Nicolás Maduro government had not fulfilled an agreement with the US-backed opposition.
Following GL44’s expiry, the US Treasury warned all corporations to apply for permission before dealing with the Venezuelan oil sector under threat of secondary sanctions. India’s Reliance Industries was the only company to receive a greenlight. PDVSA has shipped several cargoes to Indian refineries, with the two firms likewise resuming a crude-for-naphtha swap deal.
Washington has levied new rounds of individual sanctions targeting Venezuelan officials following the July 28, 2024, presidential elections and Maduro’s third term swearing-in on January 10. PDVSA President Héctor Obregón, who assumed the post in August, was among those blacklisted.
Donald Trump’s return to the White House has fueled speculation and lobbying efforts surrounding his Venezuela policy, particularly concerning the oil sector. Trump is set to take office on January 20.
Foreign policy hardliner Marco Rubio was the new administration’s pick for Secretary of State. He faced his Senate confirmation hearing on Wednesday and is expected to secure the post with bipartisan support. The longtime Florida Senator promised a “robust” foreign policy that prioritizes US interests.
The hearing was briefly interrupted by activists who denounced the impact of US sanctions on Cuba, Nicaragua and Venezuela.
Rubio was a firm supporter of the first Trump administration’s “maximum pressure” campaign to oust the Maduro government. Hardline Venezuelan opposition figures have urged US authorities to withdraw Chevron’s present license to operate its joint ventures in the South American nation. The US oil giant holds minority stakes in four projects which currently pump around 20 percent of the country’s output.
In contrast, energy lobbyists and some right-wing think tanks have urged the White House to use the present sanctions architecture to the benefit of US corporations as well as a tool to negotiate deportations of Venezuelan migrants.
The Biden administration has ruled out withdrawing existing licenses in its final days in office but pledged to “make a set of recommendations” to its successor.