Oil prices rebounded from two-month lows on Thursday after US President Donald Trump revoked a key license allowing Chevron to operate in Venezuela, a move that could tighten global crude supply.
The decision marks a significant shift in US policy and is expected to impact Venezuela’s oil exports, which account for a major share of its economy.
Brent crude futures rose 0.3% to $72.72 a barrel as of 0154 GMT, while US West Texas Intermediate (WTI) crude gained 0.2% to $68.78 per barrel.
The price uptick followed Wednesday’s market slump, driven by a surprise increase in US fuel inventories and hopes for progress in Russia-Ukraine peace talks.
Trump announced the reversal on Truth Social, stating he was “revoking the concessions” granted under an oil transaction agreement dated November 26, 2022.
Although he did not explicitly mention Chevron, the company was the sole recipient of a US license to continue operations in Venezuela under that agreement.
‘Damaging and inexplicable’
Venezuelan Vice President Delcy Rodríguez condemned the move, calling it “damaging and inexplicable.”
She argued that such sanctions have worsened Venezuela’s economic crisis and contributed to migration out of the country.
The decision means Chevron can no longer export Venezuelan crude, potentially disrupting the flow of about 240,000 barrels per day—over a quarter of Venezuela’s total oil production.
Furthermore, if Venezuela’s state-run oil company PDVSA redirects these exports, US refineries may be unable to purchase the oil due to existing sanctions.
Trump’s stance on Venezuela’s oil sector aligns with his broader energy strategy.
He has criticized the previous administration’s decision to ease sanctions, arguing that the US does not need Venezuelan crude.
His administration has also signaled plans to refill the Strategic Petroleum Reserve (SPR) after criticizing earlier withdrawals aimed at curbing gasoline prices.
Meanwhile, market participants are closely watching Trump’s ongoing negotiations regarding Russia and Ukraine.
Ukrainian President Volodymyr Zelensky is set to visit Washington on Friday for discussions that include an agreement on rare earth minerals, which could have broader geopolitical and economic implications.
Separately, the US Energy Information Administration (EIA) reported an unexpected drop in crude oil stockpiles last week, although gasoline and distillate inventories posted surprising gains.
Goldman Sachs noted that the US government’s twin goals of commodity dominance and price stability reinforce a Brent crude range of $70 to $85 per barrel, a level that supports continued US supply growth.
‘Maximum pressure’
The revocation of Chevron’s license marks a return to the “maximum pressure” sanctions policy Trump implemented during his first term against Venezuelan President Nicolás Maduro.
While the Biden administration had eased some restrictions to encourage fair elections, it reinstated broader oil sanctions in April, citing Maduro’s failure to meet electoral commitments.
However, Biden had allowed Chevron to continue operations, generating an estimated $2.1 billion to $3.2 billion annually for Venezuela through taxes and royalties.
With Trump’s latest decision, Venezuela’s oil-dependent economy faces new uncertainty, while global energy markets brace for potential supply disruptions.
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