In a significant shift in foreign policy, the United States has moved to ease key sanctions on Venezuela’s oil industry, responding directly to sweeping legislative reforms approved by the Venezuelan parliament. The U.S. Treasury Department issued a general license authorizing a wide range of transactions involving Venezuelan-origin oil, including its extraction, export, refining, and transportation, mere moments after lawmakers in Caracas voted to dismantle state controls that had long restricted private investment.
The sanctions relief follows intensive diplomatic engagement between Washington and the administration of Venezuela’s interim President, Delcy Rodriguez. This development marks a dramatic reversal from the longstanding U.S. policy of maximum pressure, which was instituted during the socialist rule of Nicolas Maduro. The reform fundamentally alters the nation’s hydrocarbon law, which dated to 2006 and had mandated that the state oil company, PDVSA, retain a majority stake in all joint ventures with foreign entities.
President Donald Trump, who has publicly praised Rodriguez, framed the policy shift as a strategic victory. He asserted that Washington is now ‘in charge’ of Venezuela’s vast energy resources, the largest proven oil reserves in the world. The administration pressured Caracas to open its oil fields to U.S. investors, a condition for its support of Rodriguez’s interim government following the ouster of Maduro.
For Venezuela, the reform is touted by its leadership as a ‘historical leap’ essential for economic recovery. Years of crippling U.S. sanctions, compounded by profound mismanagement, corruption, and underinvestment, had decimated the nation’s oil production, which plummeted to just 300,000 barrels per day in 2020. The influx of foreign capital is seen as the only path to reviving the battered economy and stabilizing the struggling national currency, the bolivar. Rodriguez has already allocated $300 million from an initial crude sale to shore up the currency.
While the reform paves the way for the return of U.S. energy majors like Exxon Mobil and ConocoPhillips—which exited in 2007—analysts note that the state retains some discretionary power in awarding contracts. The changes offer greater guarantees to private players, relinquish state control of exploration activities, and lower taxes and royalties. The industry, though showing a slow recovery with production reaching 1.2 million barrels per day, remains a shadow of its former capacity of 3 million barrels at the start of the century.