The United States government has entered a new and complex phase of hydrocarbon diplomacy, signaling a shift toward a long-term, license-based framework designed to manage Venezuelan oil exports indefinitely. This transition represents a fundamental departure from the "maximum pressure" campaign of previous years, moving instead toward a granular, controlled-release strategy that allows the U.S. Treasury Department to act as a de facto clearinghouse for Venezuela’s primary export. By leveraging specific individual licenses rather than broad, general authorizations, Washington is seeking to stabilize global energy markets while maintaining significant economic leverage over the administration of President Nicolás Maduro.
For decades, Venezuela sat at the center of the global energy stage, boasting the world’s largest proven crude oil reserves—estimated at more than 300 billion barrels. However, years of chronic underinvestment, systemic corruption within the state-run oil giant Petróleos de Venezuela, S.A. (PDVSA), and a tightening web of international sanctions have seen production plummet from a peak of 3.2 million barrels per day (bpd) in the late 1990s to approximately 800,000 to 900,000 bpd today. The current U.S. strategy aims to manage this diminished but still vital output through a sophisticated mechanism of "extractive oversight," ensuring that while oil reaches the market, the resulting revenue remains outside the direct grasp of the Venezuelan executive branch.
The architecture of this indefinite control is built upon the issuance of specific licenses by the U.S. Treasury’s Office of Foreign Assets Control (OFAC). This approach gained momentum following the expiration of General License 44, which had briefly permitted a broader range of transactions within the Venezuelan oil and gas sectors. In its place, the U.S. has reverted to a system where individual companies—such as Chevron, Repsol, Eni, and Maurel & Prom—must apply for bespoke authorizations to operate in the country. These licenses are often conditioned on "debt-for-oil" swaps, where the proceeds from sales are used to pay down billions in outstanding arrears owed to these firms, rather than being deposited into PDVSA’s coffers.
Economic analysts view this strategy as a pragmatic response to the realities of the global energy landscape. The U.S. Gulf Coast is home to some of the world’s most sophisticated refineries, specifically configured to process the "heavy" and "sour" grades of crude that Venezuela produces. Depriving these refineries of Venezuelan feedstock forces them to seek more expensive alternatives from distant markets, such as the Middle East or Canada, which can lead to higher gasoline prices for American consumers. By allowing a steady, albeit restricted, flow of Venezuelan crude into the U.S. market, Washington can mitigate domestic inflationary pressures while simultaneously starving the Maduro government of liquid cash.
Furthermore, the "indefinite" nature of this policy serves a broader geopolitical purpose: countering the influence of rival powers in the Western Hemisphere. In the absence of Western participation, Venezuela has increasingly leaned on China, Russia, and Iran for technical support and illicit trade routes. China, in particular, has been a major buyer of "shadow" Venezuelan oil, often traded through complex ship-to-ship transfers and rebranded to bypass sanctions. By maintaining a licensed presence for Western oil majors, the U.S. ensures that it retains a foothold in the region, preventing a total pivot of the Venezuelan energy sector toward Beijing and Moscow.
The economic impact on Venezuela itself is profound and multifaceted. The country is currently suffering from one of the most severe economic contractions in modern history, with its GDP shrinking by nearly 80% over the last decade. The U.S. license-based model creates a "dual economy" within the Venezuelan oil sector. Projects operated by Western companies under OFAC licenses tend to be more efficient, safer, and more environmentally compliant than those managed solely by PDVSA. However, because these projects prioritize debt repayment over national revenue, they do little to alleviate the country’s broader fiscal crisis or hyperinflation.
Expert insights suggest that the U.S. is also using these oil licenses as a primary tool for political conditioning. The "carrot and stick" approach links the renewal or expansion of licenses to progress on democratic reforms and the holding of fair elections. However, the move toward an indefinite oversight model suggests that Washington has reconciled itself to the idea that political change in Caracas may be a multi-decade endeavor. Rather than waiting for a total transition of power, the U.S. is institutionalizing a system that manages the status quo, protecting its energy interests and regional stability while keeping the Venezuelan government on a short financial leash.
Market data indicates that the global oil supply remains precarious, with OPEC+ production cuts and geopolitical tensions in the Middle East keeping prices volatile. In this context, Venezuela’s potential to increase production by several hundred thousand barrels per day is a significant variable. Industry experts believe that with sufficient investment, Venezuela could reach 1.2 million bpd within two years. However, such an expansion would require billions of dollars in capital expenditure—funds that only Western international oil companies can provide, and only if they have the long-term legal certainty that U.S. licenses provide.
This long-term strategy also carries significant risks. There is a growing concern among some economists that the indefinite control of Venezuelan oil sales could lead to a permanent "gray market" for the country’s crude. If the hurdles for legal, licensed trade remain too high, PDVSA may find more value in continuing its clandestine partnerships with "ghost fleets" and unregulated intermediaries. This would not only undermine the effectiveness of U.S. sanctions but also contribute to environmental degradation, as these shadow operations often ignore international safety and spill-prevention standards.
Moreover, the legalities of the U.S. position are being tested in international courts. The ongoing battle over Citgo, the U.S.-based refining arm of PDVSA, is a prime example. As creditors scramble to seize Citgo’s assets to satisfy billions in claims against the Venezuelan state, the U.S. government has had to intervene repeatedly to manage the sale process. This judicial entanglement further complicates the "indefinite control" narrative, as the U.S. executive branch must balance the rights of private creditors against national security interests and foreign policy goals.
Comparing the Venezuelan situation to other sanctioned energy producers, such as Iran or Russia, reveals a unique level of American involvement. While Russian oil is subject to a price cap and Iranian oil is largely under a blanket embargo, Venezuelan oil is being managed through a "managed participation" model. This allows the U.S. to maintain a degree of "soft power" within the Venezuelan economy that it lacks in Tehran or Moscow. It is a form of economic statecraft that treats a nation’s resources as a regulated utility rather than a sovereign asset.
Looking ahead, the sustainability of this policy will depend on the stability of the global energy transition. As the world moves toward decarbonization, the long-term value of Venezuela’s heavy crude may diminish. However, for the next two decades, the world will still require massive quantities of petroleum, and the U.S. appears determined to ensure that Venezuela’s reserves are developed on Western terms. The "indefinite" nature of this oversight suggests that Washington is no longer looking for an exit strategy, but rather a permanent management strategy for a neighbor that is too resource-rich to ignore and too politically volatile to fully embrace.
The message to the international community and the private sector is clear: the road to Venezuelan oil must pass through Washington. This centralized control over one of the world’s most important commodities represents a significant evolution in the use of economic sanctions as a tool of permanent foreign policy. It is a high-stakes gamble that seeks to balance the immediate needs of global energy security with the long-term objective of promoting regional stability and democratic accountability. Whether this model of perpetual oversight can truly foster a more stable Venezuela, or if it will simply result in a prolonged period of economic stagnation and redirected trade, remains the defining question of current Western energy strategy in the Americas.
