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PDVSA, Venezuela’s state-run oil company, is set to assume full control over crude production at its joint ventures with Chevron following the revocation of the U.S. supermajor’s license to operate in the country. This move comes after the Trump administration terminated Chevron’s sanction waiver, which had permitted the company to maintain a foothold in Venezuela despite existing U.S. sanctions. According to Reuters, which cited an internal PDVSA document, the development will leave the South American nation’s oil industry even more isolated from foreign investment. The cancellation of the waiver underscores Washington’s hardline approach toward Venezuela’s government, which has been under significant economic pressure since U.S. sanctions were first imposed in 2019. Market analysts suggest that Chevron’s forced departure could deepen Venezuela’s ongoing struggles to revive its oil industry, as PDVSA has faced operational inefficiencies and declining output due to underinvestment and mismanagement.
At the end of February, President Donald Trump cited the lack of democratic reforms in Venezuela as the primary reason for canceling the waiver, signaling that the U.S. would continue its campaign to weaken President Nicolás Maduro’s regime through economic measures. The Chevron waiver had been seen as a crucial element in allowing at least some U.S. involvement in Venezuela’s oil sector while ensuring that PDVSA did not fully collapse. With Chevron no longer permitted to operate, Venezuela will now have to rely on partners outside the U.S., including China, Russia, and Iran, all of whom have been engaged in circumventing American sanctions. However, PDVSA’s limited access to capital and equipment, exacerbated by years of corruption and declining production capabilities, suggests that replacing Chevron’s role will not be an easy task. Investors in global energy markets have responded cautiously, with oil prices experiencing minor fluctuations as traders assess the potential disruption to global supply and Venezuelan exports.
The expulsion of Chevron marks another turning point for Venezuela’s energy industry, which once ranked among the world’s top crude producers. In recent years, output has plummeted to historic lows, with production dipping below 500,000 barrels per day at various points in 2020. Experts warn that without international expertise and technology, PDVSA may struggle to maintain even its current reduced levels of production. While the company has explored partnerships with other entities, including smaller private firms and shadowy intermediaries facilitating transactions in the black market, these strategies have yielded limited success. International oil traders remain wary of violating U.S. sanctions, making it increasingly difficult for PDVSA to legally access global financial markets. The continued withdrawal of Western firms also aligns with broader geopolitical tensions, reinforcing the fragmentation of the global oil alliance as countries like China and Russia tighten their influence over sanctioned oil producers.
In financial markets, the impact of Chevron’s exit has been primarily sector-specific, with energy stocks experiencing mild shifts as investors evaluate the broader implications. Shares of oil majors such as ExxonMobil and Chevron saw minor volatility following the announcement, though long-term effects will depend on how PDVSA and the global crude market adapt to the change. Some analysts believe that the reduced access to Venezuelan crude could marginally impact refining costs in certain markets, though the global oil supply remains relatively stable due to OPEC+ production management. Additionally, Venezuelan crude has faced declining demand in recent years due to its high sulfur content and logistical challenges in refining. Nevertheless, this latest development underscores the fragility of Venezuela’s oil industry and the ongoing geopolitical risks contributing to uncertainty in global energy markets.
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