President-elect Donald Trump’s emerging stance on Venezuela is sending shockwaves through global energy markets, with his administration’s expected policy shift threatening to disrupt crude oil supplies and trigger price volatility well into 2025.
Market analysts have been closely monitoring Trump’s recent statements suggesting a complete reversal of the Biden administration’s Venezuela policy. The Republican’s campaign pledges to reimpose “maximum pressure” on President Nicolás Maduro’s government could effectively remove hundreds of thousands of barrels of Venezuelan crude from global supplies.
“This represents a significant pivot in U.S. energy geopolitics,” explains Martin Fernandez, senior petroleum analyst at Goldman Sachs. “Markets are already pricing in the potential supply disruptions, with benchmark Brent crude futures displaying unusual volatility patterns.”
The Biden administration had gradually eased sanctions against Venezuela’s oil sector beginning in 2022, allowing Chevron and other international companies to resume limited operations. This policy shift helped Venezuelan crude production recover to approximately 910,000 barrels per day by mid-2024, according to the latest OPEC monthly report.
Trump’s anticipated reversal would likely target these oil license exemptions first. “The easiest and most immediate action would be to revoke the general licenses that currently permit certain companies to operate in Venezuela,” notes Alexandra Benavides, Latin America policy director at the Atlantic Council.
Financial markets are particularly sensitive to these developments as global oil benchmarks remain under pressure from multiple directions. The potential Venezuela policy shift comes amid ongoing OPEC+ production cuts and heightened tensions in the Middle East, creating what energy strategists describe as a “perfect storm” for supply uncertainty.
Venezuela holds the world’s largest proven oil reserves, but years of mismanagement, corruption, and sanctions have devastated its petroleum industry. Once capable of producing over 3 million barrels daily, the country has struggled to maintain even a third of that output in recent years.
Data from the U.S. Energy Information Administration indicates that Venezuelan crude exports to the United States had begun recovering modestly under Biden’s relaxed sanctions, reaching approximately 145,000 barrels per day by September 2024. This represents a fraction of pre-sanctions levels but had become an important revenue stream for Caracas.
The prospect of renewed sanctions comes at a delicate moment for global energy markets. “We’re entering a period of significant supply tightness,” warns Maria Jimenez, chief commodities strategist at Citigroup. “Removing Venezuelan barrels from the market, even with U.S. production at record levels, creates potential price pressure points, particularly for Gulf Coast refineries optimized for processing heavy crude.”
Industry insiders suggest Trump’s Venezuela strategy may differ from his first term. Rather than blanket sanctions, his administration might pursue a more targeted approach leveraging oil policy to extract specific concessions from Maduro, particularly regarding democratic reforms and migration control.
The policy shift carries broader geopolitical implications. Venezuela has deepened ties with China, Russia, and Iran during its international isolation. Chinese companies have invested billions in Venezuelan oil fields, while Russian state oil giant Rosneft has helped Venezuela circumvent previous sanctions by marketing its crude through intermediaries.
“Trump’s Venezuela policy will necessarily intersect with his approach to China and Russia,” observes Carlos Vasquez, director of the Center for Strategic and International Studies’ Energy Security Program. “It’s not just about the oil but about challenging these powers’ influence in America’s backyard.”
The administration’s approach will significantly impact U.S. Gulf Coast refineries, which were historically configured to process Venezuela’s heavy crude varieties. When sanctions initially cut off this supply, these facilities were forced to source alternative heavy crude from Canada, Mexico, and elsewhere at premium prices.
Industry data shows that refiners like Valero Energy and PBF Energy have been gradually reincorporating Venezuelan crude into their operations since 2023. A second disruption would force operational adjustments and potentially squeeze refining margins.
“The timing couldn’t be more challenging for Gulf Coast refiners,” states Robert Martinez, refining sector analyst at Bank of America Securities. “Many facilities are just completing maintenance cycles ahead of winter fuel demand. Sudden supply chain disruptions could impact gasoline and diesel prices in sensitive regions.”
For Venezuela itself, renewed sanctions would deliver a devastating blow to its fragile economic recovery. The country’s GDP grew by an estimated 4.5% in 2023 – its first significant growth in years – largely attributed to oil sector improvements.
“Maduro’s government has been using the revenue from increased oil exports to shore up support ahead of the contested 2024 elections,” explains Veronica Escobar, Venezuela specialist at the Wilson Center. “Cutting off this lifeline would intensify Venezuela’s humanitarian crisis and potentially trigger another wave of migration.”
As Trump prepares to take office, oil market participants remain on high alert. The incoming administration’s actual policy may take months to fully materialize, but its mere prospect has already injected significant uncertainty into energy markets that will likely persist throughout 2025.
