April 3 marks the deadline for Chevron to cease its operations in Venezuela, a significant setback imposed by the new Trump administration on the Nicolás Maduro-led government.
Usually, a company gets six months to pack up. Trump wants Chevron to get it done in one.
It has only been a week since Trump cut off the Biden-era financial lifeline to Venezuela by revoking Chevron’s oil export deal. Trump, via his Truth Social account, said the Chevron license was revoked because Nicolás Maduro did not meet the democratic conditions for last July’s presidential election. While the Biden administration had already imposed sanctions for Maduro’s missteps, canceling the Chevron deal dealt an even harsher blow. Adding to Trump’s frustration, Maduro has reportedly been slow to facilitate the return of Venezuelan migrants.
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If Chevron halts production in Venezuela, it could ultimately take up to 200,000 barrels per day off the global market. A sizeable part of this oil supplies U.S. Gulf Coast refineries, which are configured to process heavy crude. Its exit creates a significant void. Where will U.S. refiners source heavy crude now, and at what cost?
Bloomberg said the immediate effect on oil prices is expected to be minimal, particularly given OPEC’s surprise decision to boost output this week, starting with a 138,000 barrel-per-day increase in April.
Chevron accounted for roughly 20% of Venezuela’s total production, offering a rare source of economic stability and much-needed hard currency. Its revenue was one of the few factors preventing the country from total collapse. The move could force Maduro’s hand to go back to the negotiation table with the Trump administration.
