US eases sanctions on Venezuelan oil as Trump seeks to boost global oil supplies during Iran war

WASHINGTON (AP) — 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 restrictions, on Wednesday, as the Trump administration looks for ways to boost global oil supplies during the Iran war.

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

Separately, the White House said that Trump would, for 60 days, waive Jones Act requirements related to the transportation of goods shipped between US ports on US-flagged ships. The 1920s law, designed to protect the American shipbuilding sector, is often blamed for making gas more expensive.

The moves highlight growing pressure on the Republican administration to ease high oil prices, as the United States, along with Israel, wages war with Iran with no expected end date. Global oil prices have since risen after Iran halted traffic through the narrow Strait of Hormuz, where a fifth of the world’s oil normally passes from the Persian Gulf to customers around the world.

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

Since Nicolas Maduro was ousted and arrested as Venezuela’s president during a US military operation in January, President Donald Trump has said the US will effectively “manage” Venezuela and sell its oil.

The US authorization provides targeted sanctions relief, but does not lift sanctions completely. The license allows companies that existed before January 29, 2025, to purchase Venezuelan oil and enter into transactions that would normally be prohibited under US sanctions, reopening trade for a major oil producer on global markets.

There are some limits.

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

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

The license is expected to give a huge boost to Venezuela’s oil-dependent economy and help encourage companies that have been wary of investing. This decision is part of the Trump administration’s interim plan to change Venezuela’s course. But critics of the current Venezuelan government say the move rewards the Venezuelan leadership — all of whom are loyal to Maduro and the ruling party — while repression, corruption and human rights abuses continue.

Many public sector workers live on roughly $160 a month, while the average private sector employee earned about $237 last year, when annual inflation rose to 475%, according to Venezuela’s central bank, and sent the cost of food beyond what many could afford.

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

A year earlier, the Treasury Department under the first Trump administration alienated Venezuela from global oil markets when it imposed sanctions on PDVSA as part of a policy that punishes the Maduro government for corrupt, anti-democratic, and criminal activities. This forced the government to sell the remainder of its oil production at a discount – about 40% below market prices – to buyers such as China and in other Asian markets. Venezuela has even begun accepting payments in Russian rubles, bartered goods or cryptocurrencies.

The new license does not allow payment in gold or cryptocurrency, including the petro, an encrypted token issued by the Venezuelan government in 2018.

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

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