Government officials in Caracas and Washington are engaged in discussions about exporting Venezuelan crude oil to refiners in the United States, according to five government, industry, and shipping sources. A potential deal could divert supplies away from China and help Venezuela’s state-owned oil company, PDVSA, avoid deeper production cuts.
Background and Context of the Talks
The discussions represent the first indication that the Venezuelan government is responding to U.S. President Donald Trump’s demand for openness to U.S. oil companies, a demand accompanied by warnings of potential further military intervention. Trump has stated he wants interim President Delcy Rodriguez to grant the U.S. and private companies “total access” to Venezuela’s oil industry.
These talks follow a blockade on Venezuelan exports imposed by the Trump administration in mid-December, which has left millions of barrels of oil stranded on tankers and in storage tanks. The blockade was part of escalating U.S. pressure on the government of Venezuelan President Nicolas Maduro, which culminated in U.S. forces capturing him this past weekend. Venezuelan officials have labeled Maduro’s capture a kidnapping and accused the U.S. of attempting to seize the country’s oil reserves.
Details of the Potential Deal
A potential agreement to sell the trapped crude to the United States could initially require reallocating cargoes originally destined for China, which has been Venezuela’s top oil buyer over the last decade, especially since the U.S. imposed sanctions on companies involved in Venezuelan oil trade in 2020.
One oil industry source commented on the timing, stating, “Trump wants this to happen early so he can say it is a big win.” The White House, Venezuelan government officials, and PDVSA did not immediately provide comment on the talks.
Current Oil Flows and Logistical Hurdles
Currently, the volume of Venezuelan oil exported to the U.S. is controlled entirely by Chevron, PDVSA’s main joint venture partner, under a U.S. authorization. Chevron has been exporting between 100,000 and 150,000 barrels per day (bpd) without interruption in recent weeks despite the blockade.
A significant logistical hurdle is how PDVSA, which is under sanctions, would receive payment for oil sales. Sanctions exclude the company from the global financial system, freeze its bank accounts, and block transactions in U.S. dollars. Furthermore, interim President Delcy Rodriguez is herself under U.S. sanctions imposed in 2018 for allegedly undermining democracy.
Proposed Sales Mechanisms and Industry Preparations
Officials have been discussing possible sales mechanisms this week. These include holding auctions to allow interested U.S. buyers to bid for cargoes and issuing U.S. licenses to PDVSA’s business partners that could lead to supply contracts.
In the past, similar licenses have allowed PDVSA’s joint venture partners and customers—including Chevron, India’s Reliance, China National Petroleum Corporation (CNPC), and European firms Eni and Repsol—to access Venezuelan oil for refining or resale. This week, some of these companies have reportedly begun preparations for receiving Venezuelan cargoes again.
The U.S. and Venezuela have also discussed the possibility of using Venezuelan oil in the U.S. Strategic Petroleum Reserve in the future, according to one source.
Reactions and Market Impact
U.S. Interior Secretary Doug Burgum said on Tuesday that an increased flow of Venezuelan heavy oil to the U.S. Gulf Coast would be “great news” for job security, future U.S. gasoline prices, and for Venezuela itself.
“Venezuela has an opportunity now to actually have capital come in and rebuild their economy and take advantage,” Burgum told Fox News. “With American technology, American partnership, Venezuela can be transformed.”
U.S. Gulf Coast refineries are configured to process Venezuela’s heavy crude grades and were importing approximately 500,000 barrels per day before Washington first imposed energy sanctions on the country.
The prospect of increased supply has already affected oil markets. Differentials for some heavy oil grades in the U.S. Gulf slipped by around 50 cents per barrel on Tuesday following news of the talks.
For PDVSA, the talks are critical. The company has already cut production due to the embargo and is running out of storage space for unsold oil. One source indicated that if PDVSA does not find a way to export oil soon, it will be forced to implement deeper production cuts.
