- Chevron’s exit threatens Venezuela’s fragile economy, potentially worsening oil production and exports.
- Venezuela could face deeper financial troubles as the government loses crucial revenue from Chevron’s operations.
- U.S. consumers are unlikely to feel the impact, with alternative oil sources available, but Venezuela risks further economic collapse without Chevron.
The Trump administration cancelled Chevron’s operating license in Venezuela, raising concerns about worsening the country’s economic crisis and changing U.S.-Venezuela relations. Analysts now consider several possible outcomes.
Chevron plays a critical role in Venezuela’s oil industry, producing about 25% of the country’s oil through joint ventures with state-owned PDVSA. Venezuela holds the world’s largest crude oil reserves and relies heavily on oil exports. Chevron’s exit could severely affect oil production and exports, which are vital to the economy.
Venezuela’s economy has sharply declined for years. Its GDP dropped nearly 80% between 2014 and 2021. Oil production reached 3 million barrels per day in 2002, dropping below 400,000 barrels by 2020. Chevron generates $150 million to $200 million per month for the Venezuelan government, and losing this revenue could worsen the financial situation. Economist Leonardo Vera from the Central University of Venezuela warns that the cancellation could turn a slight recovery into a severe downturn.
The U.S. will likely avoid significant consequences from this decision. Jorge Piñon of the Energy Institute at the University of Texas believes that American consumers won’t feel the impact, as oil imports from Canada could replace Venezuela’s supply. However, PDVSA relies heavily on foreign partners to sustain oil production. Chevron’s withdrawal, like that of Exxon and Conoco, could cause further declines in oil output and deepen Venezuela’s economic troubles.
Chevron’s license received a six-month renewal in February 2025, leaving room for negotiations before the August review. Francisco Monaldi, an expert on Latin American energy, expects discussions between U.S. and Venezuelan officials. Washington could apply pressure with economic sanctions or tariff changes, as with Colombia and Mexico. However, progress will depend on mutual concessions and shared benefits.
Venezuela’s oil industry is already in dire straits. The government’s financial stability hinges on its ability to produce and export oil. A further decline in production would reduce government revenue, making it more challenging to fund services and meet debt obligations.
The coming months will prove crucial for Venezuela. The outcome of negotiations and Chevron’s final license review could reshape the country’s oil sector and deepen its economic crisis. Without Chevron as a partner, Venezuela risks losing crucial cash flow, harming its economy. In contrast, U.S. consumers may not notice the change, as other oil sources remain available.
As Venezuela’s economic and political landscape evolves, international partnerships in the oil industry will play a key role in shaping the country’s future. Whether negotiations between the U.S. and Venezuela can prevent further economic decline remains uncertain.