On Tuesday, Chevron’s license to operate in Venezuela expired, stirring up debate within the Trump administration. The license allowed Chevron to continue its operations despite U.S. sanctions, and its expiration raised questions about the future of U.S.-Venezuela relations.
The situation became contentious when Richard Grenell, the Special Envoy, announced a 60-day extension for Chevron on May 21. However, Secretary of State Marco Rubio quickly contradicted him, confirming that the license would end as planned on May 27. Extensions for such licenses require approval from both the Treasury and State Departments. Ultimately, the agencies agreed to restrict Chevron’s activities to only essential maintenance, a status similar to what the company faced during Trump’s first term.
Some officials believe this decision diminishes Trump’s influence over Venezuela and may allow China to gain access to the country’s vast oil reserves. However, the reality is more complicated. During Trump’s presidency, the U.S. employed a “maximum pressure” strategy that targeted Venezuela’s oil sector. The Biden administration had relaxed some sanctions, allowing Chevron and other companies to operate, but many restrictions were reinstated in April 2023, leaving Chevron’s license intact.
In February, the Trump administration revoked a license that Biden had issued in November 2022. Yet, after Venezuela agreed to allow the return of deported migrants and released American hostages, the license was extended for 60 days in March. Despite these agreements, Venezuelan President Nicolás Maduro failed to follow through on his commitments, leading to a worsening human rights situation.
Before the recent changes, Chevron was limited to maintenance operations and could not exploit or export Venezuelan oil. Now, Chevron is back to its previous restrictions and will not be able to export oil or purchase it from Venezuela. This shift has raised concerns that China could take advantage of the situation, as they already have a significant presence in Venezuela.
China’s involvement in Venezuela has not been as fruitful as hoped. Oil production from joint ventures with Venezuela has declined since 2016, and trade between the two countries has also decreased. China has lent Venezuela over $60 billion and is now seeking to recover its investments through discounted oil shipments. Thus, the expectation that Chinese influence would grow as Chevron’s operations were curtailed may not hold true.
The impact of Chevron’s license expiration is significant for Venezuela. The company has been exporting between 200,000 and 240,000 barrels of oil daily, contributing around $400 million monthly to the Venezuelan economy. This income has been crucial for Maduro’s regime, providing tax and royalty payments that have supported the oil industry. With the sanctions now in place, the Venezuelan government faces a financial crisis, and the Chinese are unlikely to step in to fill the gap.
In response to the increasing pressure, the Venezuelan government has intensified its crackdown on dissent. Recently, around 70 opposition leaders and activists were arrested, including Juan Pablo Guanipa, a prominent figure in the opposition. His arrest has raised alarms about the regime’s repressive tactics, possibly as a desperate measure to regain leverage with the U.S. regarding the Chevron license.
The Trump administration has made it clear that it will not negotiate under these circumstances. In March, the U.S. imposed a 25 percent tariff on goods imported from any country that imports Venezuelan oil. This move underscores the administration’s stance that American companies should not dictate U.S. foreign policy, especially when it involves supporting a regime that contributes to instability through drug trafficking and migration crises.
In summary, the expiration of Chevron’s license marks a significant shift in U.S.-Venezuela relations, impacting both the Venezuelan economy and the geopolitical landscape in Latin America. As the situation evolves, it remains to be seen how both the U.S. and Venezuela will respond to these new challenges.