US 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 seeks ways to boost oil supplies amid the Iran war.
The Treasury Department has issued a broad authorization allowing Petróleos de Venezuela SA, or PDVSA, to sell directly to Venezuelan oil companies in the US and international markets, a major change after Washington has for years largely blocked cooperation with the Venezuelan government and its oil sector.
Separately, the White House said Trump would suspend, for 60 days, the Jones Act’s requirements for goods shipped between U.S. ports to be shipped on U.S.-flagged vessels. The 1920s law, designed to protect America’s shipbuilding industry, is often blamed for making gas more expensive.
The moves highlight the growing pressure the Republican administration is under to reduce oil prices as the United States, along with Israel, wrestles with Iran with no end date in sight. Global oil prices have since risen since Iran blocked traffic through the narrow Strait of Hormuz, through which one-fifth of the world’s oil normally passes from the Persian Gulf to customers around the world.
Drivers in the United States are paying the highest pump prices in about 2 1/2 years. The national average for a gallon of regular gasoline reached $3.84 on Wednesday according to AAA, compared with $2.98 before the US and Israel launched strikes against Iran on Feb. 28.
Even before that, voters were worried about the high cost of living, and gas prices are now adding to the worries of Republicans heading into election season with their control of Congress at risk in November.
“Gas prices are up and we know they’re up. And we know people are getting hurt because of it. And we’re doing everything we can to make sure they stay down,” Vice President JD Vance said at an event in Auburn Hills, Michigan. “This is a temporary error.”
The Treasury Department’s license is designed to encourage new investment in Venezuela’s energy sector and is intended to benefit the US and Venezuela, while increasing global oil supplies, a Treasury official told the Associated Press. The official was not authorized to speak publicly about the matter and spoke on condition of anonymity.
Since the ouster and arrest of Nicolás Maduro as president of Venezuela during a US military operation in January, President Donald Trump has said the US will effectively “run” Venezuela and sell its oil.
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A US license provides targeted relief from penalties, but does not remove penalties entirely. The license allows companies that existed before Jan. 29. 2025, to buy Venezuelan oil and engage in activities that are often prohibited under US sanctions, reopening the largest oil producer’s trade in world markets.
It won’t have a big impact on US gas prices in the short term, said Geoff Ramsey, a Latin America expert at the Atlantic Council think tank.
“We’re talking about 12 to 18 months before we see significant changes in Venezuelan production,” Ramsey said in an interview.
US investment in Venezuela
The license is expected to significantly boost Venezuela’s oil-dependent economy and help encourage companies that have been wary of investing. The decision is part of the Trump administration’s plan to reform Venezuela.
There are some limitations. Payments cannot go directly to authorized Venezuelan entities such as PDVSA, but must be sent to a special account controlled by the US. In other words, the US will allow oil trade but will control the flow of money.
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.
Critics of Venezuela’s interim government say the move rewards Venezuela’s leadership — all loyal to Maduro and the ruling party — while repression, corruption and human rights abuses continue.
Most public sector workers live on about US$160 a month, while private sector workers earned about US$237 last year, when inflation soared to 475 percent, according to Venezuela’s central bank, and sent food costs beyond what many could afford.
Venezuela sits on the largest oil reserves in the world and used them to run what was once the strongest economy in Latin America. But corruption, mismanagement and US economic sanctions have seen production drop from 3.5 million barrels a day in 1999, when Maduro’s mentor, Hugo Chávez, took power, to less than 400,000 barrels a day in 2020.
Last year, the Treasury Department under the Trump administration locked Venezuela out of global oil markets when it approved the PDVSA as part of a policy punishing Maduro’s government for corrupt, anti-democratic and criminal activities. That has forced the government to sell the remaining oil at a discount – about 40% below the market price – to buyers such as China and other Asian markets. Venezuela even started accepting payments in Russian rubles, bartered goods or cryptocurrency.
The new license does not allow payments in gold or cryptocurrency, including the petro, which was a crypto token issued by the Venezuelan government in 2018.
White House press secretary Caroline Leavitt said the repeal of the Jones Act would help “reduce temporary disruptions in the oil market” during the Iran war and “allow essential resources such as oil, natural gas, fertilizer and coal to flow freely through American ports.”
Ramanan Krishnamoorti, vice president for energy and innovation at the University of Houston, said the move is expected to reduce gas price increases in parts of the country such as the mid-Atlantic.
“Places like Texas and Chicago are unlikely to feel any change in the price of gasoline and diesel due to the cancellation of the Jones Act,” said Krishnamoorti. He said the biggest impact would be on US shippers who now face more competition from the loosening of shipping regulations, which could mean higher costs for them.
