US eases Venezuela oil sanctions amid Iran war; Trump administration moves to boost global supply

The United States has eased sanctions on Venezuela’s state-owned oil sector, allowing American companies to resume limited business with Petróleos de Venezuela S.A. (PDVSA), as the Donald Trump administration seeks to expand global oil supplies during the ongoing Iran conflict, AP reported.The US Treasury Department on Wednesday issued a broad licence permitting PDVSA to sell Venezuelan crude directly to US companies and in global markets, marking a major policy shift after years of restrictions on dealings with Venezuela’s government and energy industry.Separately, the White House said Trump would waive, for 60 days, requirements under the Jones Act that goods shipped between US ports be transported on US-flagged vessels. The law, introduced in the 1920s to support domestic shipbuilding, has often been criticised for contributing to higher fuel costs.The twin moves underline mounting pressure on the administration to contain rising oil prices as the United States, alongside Israel, continues military operations against Iran with no clear end in sight. Global energy markets have tightened after Tehran halted traffic through the Strait of Hormuz, a key route through which roughly one-fifth of the world’s oil supply typically passes.According to a Treasury official cited by The Associated Press, the licence is intended to encourage new investment in Venezuela’s energy sector while increasing worldwide crude availability. The official spoke on condition of anonymity.Since the ouster and arrest of Nicolás Maduro during a US military operation in January, Trump has said Washington would effectively “run” Venezuela and sell its oil output.The targeted relief does not fully remove sanctions. The licence allows companies that were operational before January 29, 2025, to purchase Venezuelan crude and conduct transactions otherwise barred under US restrictions, effectively reopening trade channels for a major oil producer.However, payments cannot be made directly to sanctioned Venezuelan entities such as PDVSA. Instead, proceeds must be routed to a US-controlled account, meaning oil trade can resume but financial flows will remain under American oversight.The licence also prohibits transactions involving Russia, Iran, North Korea, Cuba and certain Chinese entities, as well as dealings related to Venezuelan sovereign debt or bonds. Payments in gold or cryptocurrency, including the petro token issued by Caracas in 2018, are not permitted.Analysts expect the measure to provide a significant boost to Venezuela’s oil-dependent economy and reassure companies wary of investing. The decision forms part of what officials describe as a phased plan by the Trump administration to stabilise Venezuela.Critics argue the policy risks benefiting political leaders aligned with Maduro despite ongoing concerns over repression, corruption and human rights abuses. Economic conditions in the country remain strained, with many public-sector workers earning roughly $160 a month and private-sector wages averaging about $237 last year, according to Venezuela’s central bank. Inflation surged to 475%, pushing food costs beyond the reach of many households.Venezuela possesses the world’s largest proven oil reserves and once relied on them to sustain one of Latin America’s strongest economies. However, corruption, policy missteps and US sanctions led output to plunge from about 3.5 million barrels per day in 1999 to less than 400,000 barrels per day in 2020.Earlier sanctions under Trump’s first administration had forced Caracas to sell crude at steep discounts — about 40% below market rates — to buyers including China and other Asian markets, often accepting alternative forms of payment such as rubles, barter or digital assets.Meanwhile, White House press secretary Karoline Leavitt said the temporary Jones Act waiver would help “mitigate the short-term disruptions to the oil market” during the Iran conflict and “allow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports.”