UNITED STATES companies will be allowed to do business with Venezuela’s state-owned oil and gas company after the Treasury Department eased sanctions, with some limitations, on Wednesday as the Trump administration looks for ways to boost world oil supplies during the Iran war.
The Treasury issued a broad authorisation allowing Petróleos de Venezuela SA, or PDVSA, to directly sell Venezuelan oil to US companies and on global markets – a massive shift after Washington for years had largely blocked dealings with Venezuela’s government and its oil sector.
Separately, the White House said Trump would waive, for 60 days, Jones Act requirements for goods shipped between U.S. ports to be moved on U.S. flagged vessels. The 1920s law, designed to protect the American shipbuilding sector, is often blamed for making gas more expensive.
The moves highlight the increased pressure that the Republican administration is under to ease soaring oil prices as the United States, along with Israel, wages a war with Iran without a foreseeable end date. Global oil prices have since spiked as Iran halted traffic through the narrow Strait of Hormuz, where one fifth of the world’s oil typically passes from the Persian Gulf to customers worldwide.
Drivers in the United States are paying the highest pump prices in about two and a half years. The national average for a gallon of regular gasoline topped US$3.84 on Wednesday, according to AAA, compared with US$2.98 before the US and Israel launched strikes against Iran on 28 February.
Even before that, voters were worried about higher living costs, and fuel prices are now adding to concerns for Republicans heading into the election season with their control of Congress at stake in November.
“Gas prices are up and we know they’re up. And we know that people are hurting because of it. And we’re doing everything that we can to ensure that they stay lower,” Vice President JD Vance said at an event in Auburn Hills, Michigan. “This is a temporary blip.”
The Treasury’s licence is designed to incentivise new investment in Venezuela’s energy sector and is intended to benefit both the US and Venezuela, while increasing the global oil supply, a Treasury official told The Associated Press. The official was not authorised to discuss the matter publicly and spoke on condition of anonymity.
Since the ouster and arrest of Nicolás Maduro as Venezuela’s president during a US military operation in January, President Donald Trump has said the US would effectively “run” Venezuela and sell its oil.
The US licence provides targeted relief from sanctions but does not lift the penalties altogether. The licence allows companies that existed before 29 January 2025 to buy Venezuelan oil and engage in transactions that would normally be banned under American sanctions, reopening trade for a major oil producer to global markets.
There is not likely to be much impact on US gas prices in the short term, said Geoff Ramsey, an expert on Latin America at the Atlantic Council think tank. “We’re talking about 12 to 18 months before we see dramatic changes in Venezuelan output,” Ramsey said in an interview.
The licence is expected to give a massive boost to Venezuela’s oil dependent economy and help encourage companies that have been apprehensive to invest. The decision is part of the Trump administration’s phased in plan to turn around Venezuela.
There are some limits. Payments cannot go directly to sanctioned Venezuelan entities such as PDVSA, but must be sent instead to a special US controlled account. In other words, the US will allow the oil trade but will control the cash flow.
Additionally, deals involving Russia, Iran, North Korea, Cuba and some Chinese entities will not be allowed. Transactions involving Venezuelan debt or bonds will not be allowed.
Critics of the acting Venezuelan government argue that the move rewards Venezuela’s leadership – all loyal to Maduro and the ruling party – while repression, corruption and human rights abuses continue.
Many public sector workers survive on roughly US$160 per month, while the average private sector employee earned about US$237 last year, when the annual inflation rate soared to 475 per cent, according to Venezuela’s central bank, sending the cost of food beyond what many can afford.
Venezuela sits atop the world’s largest oil reserves and used them to power what was once Latin America’s strongest economy. But corruption, mismanagement and US economic sanctions saw production steadily decline from the 3.5 million barrels per day pumped in 1999, when Maduro’s mentor Hugo Chávez took power, to less than 400,000 barrels per day in 2020.
AP
A year earlier, the Treasury Department under the first Trump administration locked Venezuela out of world oil markets when it sanctioned PDVSA as part of a policy punishing Maduro’s government for corrupt, anti democratic and criminal activities. That forced the government to sell its remaining oil output at a discount – about 40 per cent below market prices – to buyers such as China and other Asian markets. Venezuela even started accepting payments in Russian roubles, bartered goods or cryptocurrency.
The new licence does not allow payments in gold or cryptocurrency, including the petro, which was a crypto token issued by the Venezuelan government in 2018.
Jones Act waiver
White House press secretary Karoline Leavitt said the Jones Act waiver would help “mitigate the short term disruptions to the oil market” during the Iran war and would “allow vital resources like oil, natural gas, fertiliser and coal to flow freely to US ports.”
Ramanan Krishnamoorti, vice president for energy and innovation at the University of Houston, said that step is expected to slow the rising cost of gas prices in specific parts of the country such as the mid Atlantic.
“Places like Texas and Chicago are unlikely to feel any change in the price of gasoline and diesel because of the Jones Act waiver,” Krishnamoorti said. He added that the most significant effect will be on American shippers now facing more competition from the relaxation of shipping rules, which could mean higher costs for them.
AP
