US eases Venezuela oil sanctions as Trump seeks to boost world oil supply during Iran war

WASHINGTON– U.S. 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 seeks ways to increase global oil supplies during the Iran war.

The Treasury issued a broad authorization allowing Petróleos de Venezuela SA, or PDVSA, to sell Venezuelan oil directly to U.S. companies and on global markets, a massive shift after Washington largely blocked relations with the Venezuelan government and its oil sector for years.

Separately, the White House said Trump would waive, for 60 days, Jones Act requirements that goods shipped between U.S. ports be transported on U.S.-flagged ships. The 1920s law, intended to protect the U.S. shipbuilding industry, is often blamed for making gas more expensive.

The moves highlight increased pressure on the Republican administration to ease soaring oil prices as the United States, alongside Israel, wages a war against Iran with no foreseeable end date. Global oil prices have since soared when Iran cut off traffic through the narrow Strait of Hormuz, through which a fifth of the world’s oil typically passes from the Persian Gulf to customers around the world.

The Treasury license is designed to encourage new investment in Venezuela’s energy sector and is expected to benefit both the United States and Venezuela while increasing global oil supplies, a Treasury official told The Associated Press. The official was not authorized to discuss the matter publicly and spoke on condition of anonymity.

Since the ouster and arrest of Nicolas Maduro as Venezuela’s president in a U.S. military operation in January, President Donald Trump has said the United States would effectively “run” Venezuela and sell its oil.

The US license provides targeted sanctions relief, but does not lift them completely. The license allows companies that existed before January 29, 2025, to purchase Venezuelan oil and engage in transactions that would normally be prohibited under U.S. sanctions, reopening a major oil producer’s trade in global markets.

There are certain limits.

Payments cannot be sent directly to sanctioned Venezuelan entities such as PDVSA, but must be sent to a special account controlled by the United States. In other words, the United States will allow oil trade but control cash flow.

Additionally, deals involving Russia, Iran, North Korea, Cuba and certain Chinese entities will not be permitted. Transactions involving Venezuelan debt or bonds will not be permitted.

This license should provide a considerable boost to Venezuela’s oil-dependent economy and encourage companies that have been reluctant to invest. The move is part of the Trump administration’s progressive plan to turn Venezuela around. But critics of Venezuela’s sitting government say the move rewards Venezuela’s leaders – all loyal to Maduro and the ruling party – while repression, corruption and human rights abuses continue.

Many public sector workers survive on about $160 a month, while the average private sector employee earned about $237 last year, when the annual inflation rate soared to 475 percent, according to Venezuela’s central bank, and pushed the cost of food beyond what many can afford.

Venezuela has the world’s largest oil reserves and has used them to fuel what was once Latin America’s strongest economy. But corruption, mismanagement and US economic sanctions have seen production gradually decline, from the 3.5 million barrels per day pumped in 1999, when Maduro’s mentor Hugo Chavez took power, to less than 400,000 barrels per day in 2020.

A year earlier, the Treasury Department, under the first Trump administration, excluded Venezuela from global oil markets when it sanctioned PDVSA as part of a policy punishing Maduro’s government for corrupt, undemocratic and criminal activities. This forced the government to sell its remaining oil production at a discount – around 40% below market prices – to buyers such as China and other Asian markets. Venezuela has even started accepting payments in Russian rubles, bartered goods or cryptocurrency.

The new license does not allow payments in gold or cryptocurrency, including petro, which was a crypto token issued by the Venezuelan government in 2018.

At the same time, White House press secretary Karoline Leavitt said the Jones Act waiver would help “mitigate short-term oil market disruptions” during the Iran war and “allow vital resources like oil, natural gas, fertilizer and coal to flow freely to U.S. ports.”

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Garcia Cano reported from Caracas, Venezuela. Associated Press writer Seung Min Kim contributed to this report.