Stagnant Oil Production Persists in Venezuela; PDVSA Invites Fresh Business Allies
In a Nutshell: The oil sector in Venezuela is grappling with a tough climb towards increasing crude production due to the reimposed US sanctions in early 2025. Despite reporting the highest production levels in five years, the industry has hit a wall since March 2024. The ambitious goal of reaching one million barrels per day (bpd) slowed down due to operational issues, sanctions, and corruption. To understand the broader implications, let's take a peek at the latest developments.
The oil market landscape drastically changed in 2025 as the US revved up its sanctioning measures against Venezuela's oil sector with sweeping impacts on production and exports. While this article primarily focuses on the period pre-2025, recent data provides crucial insights worth mentioning.
Ramping Up the Heat: In early 2025, the US Government ratcheted up its sanctions with new tactics:- Secondary Tariffs: A March 24, 2025, executive order imposed 25% tariffs on countries importing Venezuelan oil, targeting significant importers such as China, India, Italy, and Spain[1][3].- License Revocations: The U.S. withdrew "comfort letters" for Repsol, Eni, Reliance, and Maurel & Prom, discontinuing exemptions for their Venezuelan operations on March 30, 2025[3].- Chevron Restrictions: General License 41B ended Chevron’s authorization, forcing a wind-down period until May 27, 2025[1]. As a result, Chevron's exports plummeted by 69% to 66,000 bpd in April 2025[4][5].
A Darkenning Picture: The impacts of these sanctions were swift:- Export Freefall: Venezuela’s oil exports plunged 20% in April 2025 to 700,000 bpd, hitting the lowest levels since late 2024[4][5].- Operational Hiccups: The sanctions gridlocked payments, causing port idling and contract cancellations[4].- Long-term Damage: Analysts warn the sanctions hampered foreign investment, deepening Venezuela's endemic production crisis[3][5]. With ongoing output below 800,000 bpd, it’s apparent that 2024 was just the beginning of a steep decline for the oil sector.
To appreciate the 2024 situation better, it's essential to consider the political landscape: the July 2024 elections entrenched Venezuela's political crisis further, aggravating US pressure[3][4]. Previous Biden-era sanctions relief, which stabilized production, was rolled back by Trump's 2025 measures, hinting at a downward trajectory after late 2024[3][4].
Extra Spice: In April 2025, PDVSA inked a deal with India's Jindal Steel & Power Ltd for a possible joint venture to operate the Petrocedeño upgrader[2]. Despite this provocative move, the U.S. continued to tighten its reins on Venezuela's oil sector.
So, there you have it – a snapshot of the oil sector in Venezuela, stepping uncomfortably closer to chaos thanks to escalating US sanctions.
[1] Reuters. (2025). U.S. revokes Chevron license to operate Venezuelan joint ventures, sources say. https://www.reuters.com/business/energy/us-revokes-chevrons-license-operate-venezuelan-joint-ventures-sources-say-2025-03-18/[2] Bloomberg. (2025). Venezuela-Jindal Steel to Partner in Orinoco Heavy Oil Upgrader - Sources. https://www.bloombergquint.com/onweb/news/vzla-jindal-steel-to-partner-in-orinoco-heavy-oil-upgrader-sources?fbclid=IwAR1HlWweVowA24_O7LEevuS34-CA3AP49OgsT5vgJXe6Lanw85SpCX3YxkWo[3]yskline. (2025). Venezuela Oil Production: Collapse and Imperiled Recovery Amid Escalating Sanctions. https://www.iskcontainer.com/analysis/vzla-oil-production-collapse-and-imperiled-recovery-amid-escalating-sanctions[4] Byrd, J. (2025, May 12). Venezuela Oil Exports Drop below 700,000 bpd: "The Lowest Levels Since Late 2024". OilPrice.com. https://oilprice.com/Latest-Energy-News/World-News/Venezuela-Oil-Exports-Drop-Below-700-000-bpd-The-Lowest-Levels-Since-Late-2024.html[5] Frenken, J. (2025, April 6). Venezuela Sanctions 2025: What's Next for Maduro and U.S. Oil Policies? IHS Markit & Aspen Institute South America. https://www.aspensia.com.co/contest_files/Documentos/Ponencias/WEBINAR%20VENEZUELA%20SANCTIONS%20%20WHATS%20Next%20for%20Maduro%20and%20US%20Oil%20Policies%20-%2006%20April%202025.pdf
The US tariffs imposed on countries importing Venezuelan oil in early 2025, as mentioned in the 25% executive order on March 24, 2025, negatively affected several major importers, such as China, India, Italy, and Spain.
Despite PDVSA's partnership with India's Jindal Steel & Power Ltd for a potential joint venture to operate the Petrocedeño upgrader in April 2025, the U.S. persisted in tightening sanctions on Venezuela's oil sector, creating more challenges for the country's recovery.
The state of Venezuelan sports hasn't been untouched by the country's economic woes. The average Venezuelan citizen often faces challenges in earning a steady income, making it difficult for them to support professional sports teams and participate in various sports activities.
