U.S. President Donald Trump has announced plans to revoke Chevron’s oil operating license, effective March 1, 2025, marking another chapter in the tumultuous relationship between the U.S. and Venezuela. The license, which allowed Chevron to operate and export oil from Venezuela, has been pivotal for the South American nation’s battered economy. This major decision raises alarms about the forthcoming economic repercussions, especially as Venezuela has already been grappling with years of recession and rampant inflation.
Trump revealed his plan via Truth Social, stating, "the regime has not been transporting the violent criminals... back to Venezuela at the rapid pace..." The decision to revoke the license was justified on the grounds of the Venezuelan government’s failure to fulfill electoral conditions and its inadequate cooperation on the repatriation of Venezuelan migrants living in the U.S., many of whom are categorized by Trump’s administration as "violent criminals."
The stakes are exceptionally high for both Venezuelans and the U.S. The license, initially granted during the Biden administration, enabled Chevron to produce approximately 240,000 barrels of oil per day from Venezuela’s vast reserves — roughly 25% of the country’s total output, which has plummeted dramatically since 2014. If Chevron is forced to exit, economic experts predict Venezuela could lose anywhere from 100,000 to 300,000 barrels per day, exacerbated by sharp drops in foreign revenue.
Delcy Rodríguez, the Venezuelan Vice President, condemned the U.S. decision, calling it "damaging and inexplicable" and asserting, "This kind of measure... stimulates the increase of migration," reflecting concerns over worsening economic conditions prompting more Venezuelans to flee their homeland.
Economists agree this decision will not merely affect oil production but ripple through the economy, leading to increased inflation and currency devaluation. According to economist Francisco Monaldi, Chevron contributed critically to the Venezuelan economy, highlighting, "Chevron is responsible for around 40% of the dollars for the private sector to finance imports," emphasizing how integral the American oil company has been for local commerce.
With U.S. sanctions on Venezuela established largely as part of Trump’s broader foreign policy during his first term, many Latin American scholars argue relief from those sanctions was intended to promote free and fair elections. The Biden administration had initially sought to leverage Chevron's operations as part of negotiations with Maduro’s administration; now, Trump’s sudden shift appears aimed at signaling the administration's hardline stance as presidential elections approach.
This recent revocation poses risks for Maduro’s government, increasingly reliant on foreign partnerships and oil revenues, as well as threatening to improve Venezuela’s capacity for generating income needed for basic sustenance. Reports suggest this could push Venezuela back to selling oil on the black market, mainly to China, where sanctions compliance issues make sales more difficult and reduce profits.
Trump's decision drew immediate reactions from various stakeholders. The Venezuelan opposition welcomed the news, with Maria Corina Machado declaring it as evidence of Trump's commitment to" democracy and prosperity for both the U.S. and Venezuela." Yet, economists caution against viewing this simply as a victory for opposition forces, and stress the potential for economic decline affecting ordinary Venezuelans severely.
Notably, if Chevron were to leave, this could leave the door open for Russian and Chinese oil firms to increase their activities, potentially solidifying their foothold within Venezuela, which could alter the strategic balance of power within the region. Mike Wirth, Chevron's CEO, has warned of the broader impacts should Chevron be forced to vacate, indicating this might result in increased migration to the U.S. as conditions worsen.
Trump's announcement is expected to continue shaping the dynamics of relations between the U.S. and Venezuela, illustrating the challenges of foreign diplomacy intertwined with domestic political landscapes. The consequences of the decision stand to impact not only the economies of both nations but also the lives of countless Venezuelans who face uncertainty as their country’s economic crisis deepens.
Experts predict the formal impacts of the revocation will begin soon, with the remaining operations being limited by the terms of existing agreements until August 2025. Yet the overall outlook remains shaky, with fears prevailing about increasing inflation rates and reduced economic activity. Historically, Venezuela has seen its economy shrink dramatically, and the removal of Chevron becomes yet another challenge to the beleaguered nation, which is already reeling from significant economic and humanitarian crises.