CARACAS, Venezuela — In 2022, signs of recovery appeared for Venezuela after enduring years of authoritarian governance and stringent economic sanctions. President Nicolás Maduro made a commitment to hold a democratic presidential election, prompting the U.S. to approve a financial reprieve for him: a permit for Chevron, a major American energy company, to extract and export Venezuelan oil.
As a result, oil production resumed, and large tankers returned to Venezuela’s shores to collect its crude oil, which is known to be challenging to refine, for shipment to the U.S. However, the anticipated election did not transpire as a genuinely democratic process, leading to Maduro’s swearing-in for a third consecutive term, despite credible allegations indicating that he may have lost to his opponent. Nevertheless, the sanctions reprieve granted by the U.S. has still contributed significantly to national revenues.
Opposition groups in Venezuela contend that the Maduro administration has profited immensely from oil exports permitted under the U.S. license. There have been calls from major opposition factions, alongside bipartisan members of the U.S. Congress, urging for the cancellation of this permit, which now comprises approximately 25% of the country’s oil output. Senior officials within the Biden administration have found it challenging to articulate why the permit remains active, merely stating that the U.S. sanctions policy against Venezuela undergoes regular assessments. President Biden recently mentioned he lacked sufficient information to modify oil-related sanctions prior to his upcoming departure from office.
Historically, Venezuela possesses the world’s largest verified oil reserves and once utilized them to propel Latin America’s most robust economy. However, due to corruption and poor governance, compounded with debilitating U.S. sanctions, production has dwindled significantly—from 3.5 million barrels per day in 1999 at the onset of Hugo Chávez’s socialist revolution to less than 400,000 barrels a day in 2020.
Chevron, based in California, has had a presence in Venezuela since the 1920s, operating through joint ventures with the state-run Petroleos de Venezuela S.A. (PDVSA). In 2019, these ventures were producing about 200,000 barrels daily, but U.S. sanctions implemented by then-President Donald Trump in 2020 forced Chevron to curtail its operations. The ensuing pandemic further exacerbated economic hardship, with a staggering 30% drop in economic activity noted that year, and inflation skyrocketing above 1,800%. For many Venezuelans, scavenging for food scraps and other necessities became a common struggle.
Cut off from international oil markets, Venezuela shifted to selling its oil at severely discounted rates—up to 40% below market value—to customers in China and other Asian nations, sometimes even accepting payment in Russian rubles, barter goods, or cryptocurrencies.
After obtaining permission to export oil to the U.S., Chevron’s joint ventures quickly ramped up production, reaching 80,000 barrels a day, and by 2024, output levels exceeded those of 2019. This oil is being sold at global market prices, though the license prohibits Chevron from directly providing taxes or royalties to the Venezuelan government. Instead, the company sends funds to the joint ventures, which are primarily owned by PDVSA.
Francisco Rodriguez, a Venezuelan economist, noted that Chevron’s practices involve purchasing oil from these joint ventures, which creates revenue that facilitates tax and royalty payments to the government. However, clarity on how the Venezuelan government allocates this revenue has been obscured since it ceased publishing much of its financial information years ago. Chevron, for its part, did not respond to inquiries on joint venture payments to the Venezuelan treasury. A company spokesperson stated that Chevron operates in Venezuela in alignment with relevant laws and regulations.
The influence of the Chevron license on Venezuela’s economy appears reflected in foreign cash reserves, which reportedly rose by around $1 billion from February 2022 to November 2024. José Guerra, an economist and former economic research manager at the Central Bank, believes that Chevron’s ability to sell oil without discounts directly contributes to these reserves.
However, critics argue that the government’s actions following the election outcomes demonstrate that the permit has not fostered democracy in Venezuela. With Maduro’s regime declaring him the victor of the July 28 election without providing a detailed vote tally, numerous voices in the opposition question why the U.S. continues to uphold a license originally intended to facilitate a democratic process.
Moreover, the aftermath of the election, coupled with repression measures, incited renewed calls for the licenses’ dismissal. Elliot Abrams, who previously served as a special representative for Venezuela, voiced concerns about the legitimacy of the election results and questioned why the Biden administration has not reverted to full sanctions.
Amidst this turmoil, Maduro has maintained a stance of defiance against U.S. pressure, declaring that Venezuela will not succumb to any form of external domination. The deeply divisive election results have left the country grappling with an ongoing crisis, driving millions into poverty and triggering mass emigration—over 7.7 million people have already fled since Maduro took office in 2013.
Rodriguez cautioned that revoking Chevron’s license or tightening sanctions could significantly affect migration, predicting that more than 800,000 Venezuelans could leave between 2025 and 2029 if the permit is rescinded. In light of these developments, Biden justified his decision not to impose stricter sanctions by emphasizing the need to assess the potential repercussions, considering whether other countries might fill any void in the oil market. He highlighted the importance of understanding the consequences of such actions before proceeding.
