US companies will be allowed to do business with Venezuela’s state-owned oil and gas company after the Treasury Department eased sanctions with some limits on Wednesday as the Trump administration looks for ways to boost world oil supplies amid a war with Iran.
The Treasury gave Petroleos de Venezuela SA, or PDVSA, broad powers to allow it to sell Venezuelan oil directly to US companies and on global markets, a sweeping shift after Washington has largely restricted dealings with Venezuela’s government and its oil sector.
Separately, the White House said Trump would waive, for 60 days, Jones Act requirements for cargo transported between US ports to be carried on US-flag vessels. The 1920 law was designed to protect the American shipbuilding sector, which was blamed for making gas more expensive.
The moves highlight pressure on the Republican administration to ease rising oil prices as the United States, along with Israel, wage a war with Iran with no foreseeable end date. Global oil prices rose as Iran shut down traffic through the narrow Strait of Hormuz, where a fifth of the world’s oil passes from the Persian Gulf to consumers around the world.
Drivers in the United States are paying the highest pump prices in nearly 2 1/2 years. The national average for a gallon of regular gasoline hit US$3.84 on Wednesday, according to AAA, compared to US$2.98 after the US and Israel launched strikes against Iran on February 28.
Even before that, voters were worried about higher living costs, and fuel prices are now a growing concern for Republicans heading into election season with control of Congress in November.
“Gas prices are up and we know they’re up. And we know people are hurting because of it. And we’re doing everything we can to make sure they stay down,” Vice President JD Vance said at the event in Auburn Hills, Michigan. “This is a temporary crisis.”
A Treasury official told The Associated Press that the Treasury license is designed to spur new investment in Venezuela’s energy sector and is intended to benefit both the US and Venezuela while boosting global oil supplies. The official was not authorized to discuss the matter publicly and spoke on condition of anonymity.
Since the ouster and arrest of Venezuelan President Nicolas Maduro during a U.S. military operation in January, President Donald Trump has said the U.S. will effectively “run” Venezuela and sell its oil.
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US licensing provides targeted relief from sanctions, but does not completely eliminate penalties. The license allows companies that existed before January 29, 2025 to buy Venezuelan oil and engage in transactions that would normally be prohibited under US sanctions, reopening trade for major oil producers to global markets.
Jeff Ramsey, a Latin America expert at the Atlantic Council think tank, is unlikely to have much of an impact on US gas prices in the short term.
“We’re talking about 12 to 18 months before we see dramatic changes in Venezuelan production,” Ramsey said in an interview.
US investment in Venezuela
The license would provide a huge boost to Venezuela’s oil-dependent economy and help encourage companies that have been wary of investing. The decision is part of the Trump administration’s step-by-step plan to turn around Venezuela.
There are some limitations. Payments cannot go directly to sanctioned Venezuelan entities such as PDVSA, but must be sent to a special US-controlled account. In other words, the US allows oil trading but controls cash flow.
Additionally, contracts involving Russia, Iran, North Korea, Cuba and some Chinese entities are not allowed. Transactions involving Venezuelan debt or bonds are not permitted.
Critics of the Venezuelan government argue that the move rewards Venezuela’s leadership — all loyal to Maduro and the ruling party — for continued repression, corruption and human rights abuses.
While the average private sector employee earned US$237 last year, many public sector workers lived on roughly US$160 a month, sending food costs beyond what many could afford, according to Venezuela’s central bank, while the annual inflation rate rose to 475 percent.
Venezuela sits on the world’s largest oil reserves and once used to power Latin America’s dominant economy. But corruption, misappropriation and US economic sanctions have seen output fall steadily from 3.5 million barrels a day pumped in 1999, when Maduro’s crony Hugo Chavez took power, to less than 400,000 barrels a day in 2020.
A year ago, the Treasury Department under the first Trump administration locked Venezuela out of world oil markets after it approved PDVSA as part of a policy to punish the Maduro government for its corrupt, anti-democratic and criminal activities. This forced the government to sell its remaining oil production at a discount – about 40% below the market price – to buyers such as China and other Asian markets. Venezuela started accepting payments in Russian rubles, barter goods or cryptocurrency.
The new license does not allow payments in gold or cryptocurrency, including the petro, a crypto token issued by the Venezuelan government in 2018.
White House press secretary Carolyn Leavitt said the Jones Act waiver would help “mitigate short-term disruptions to the oil market” during the Iran war and “allow vital resources such as oil, natural gas, fertilizer and coal to flow freely to U.S. ports.”
Ramanan Krishnamurthy, vice president for energy and innovation at the University of Houston, said the move is expected to slow the cost of rising gas prices in certain parts of the country, such as the mid-Atlantic.
“Places like Texas and Chicago are unlikely to experience any change in gasoline and diesel prices due to the Jones Act waiver,” Krishnamurthy said. The most significant impact will be on American shippers, who face more competition from the relaxation of shipping rules, which could mean higher costs for them, he said.
(tags to translate)Iran(T)Iran War(T)Venezuela(T)World
