Venezuela, a nation once prosperous with the largest oil reserves in the world, now grapples with a multifaceted crisis. Over 20 million of its citizens live in multidimensional poverty, and the mass exodus of over 8 million people under President Nicolás Maduro’s regime underscores the country’s dire situation. This crisis has profound implications for US-Venezuelan relations, notably as the United States remains a significant importer of Venezuelan crude oil.
The Venezuelan economy's collapse has been staggering. Though it ceased crashing last year, inflation continues at a crippling 48% year-on-year. The country's oil reserves, while vast, do not shield it from the socio-economic turmoil that has unfolded under Maduro's leadership. Despite possessing these resources, over 70% of Venezuelans expressed an increased intention to migrate following Maduro's contested election in July.
Venezuela plays a crucial role in global oil markets, supplying crude oil predominantly to US refineries on the Gulf Coast. In 2024, the United States ranks as the third-largest importer of Venezuelan oil. However, the S&P Global Commodity team anticipates that changes in the US administration might lead to the cancellation of all licenses except for Chevron's. This action could decrease Venezuela's oil output, but experts suggest it will have only minor impacts on oil imports and limited effects on gas prices.
The US has historically employed varied strategies to address the Venezuelan crisis. The first Trump administration took a "maximum pressure" approach in 2019, forming a coalition of over 50 countries to recognize Juan Guaidó as Venezuela's legitimate leader. In contrast, the Biden administration has issued special licenses allowing companies to operate in Venezuela despite existing sanctions. This includes US giant Chevron, which has reestablished its pivotal role in the Venezuelan oil sector.
Amid these complex relations, President Maduro's recent rhetoric about "liberating" Puerto Rico—a US territory—has sparked international concern. Jenniffer Gonzalez, Governor of Puerto Rico, called it "not only a blatant threat of military aggression against the US, but also an incitement against peace and stability in our region." Indira Urbaneja, a political consultant aligned with Maduro's government, dismissed it as "more a provocation than anything else."
"not only a blatant threat of military aggression against the US, but also an incitement against peace and stability in our region." – Jenniffer Gonzalez, Governor of Puerto Rico
"more a provocation than anything else." – Indira Urbaneja, political consultant aligned with the Maduro government
"liberating" the US territory of Puerto Rico – Nicolas Maduro, Venezuelan President
Maduro's statements have not been well-received abroad. Benigno Alarcón, a professor of Politics at Caracas's Andrés Bello Catholic University, emphasized that such declarations do not help Maduro's standing internationally.
"It doesn't do Maduro any favor… on the contrary, it exacerbates the animosity that exists against Maduro in the US government and among most Americans." – Benigno Alarcón, professor of Politics at Caracas's Andrés Bello Catholic University
The situation remains tense as protesters voice their grievances against international sanctions, claiming they are "killing children in Cuba, Nicaragua and Venezuela."
"sanctions killing children in Cuba, Nicaragua and Venezuela." – protesters
Migration remains a critical issue with more than 8 million Venezuelans having crossed the Southern Border illegally in recent years. This exodus highlights the desperation felt by many under Maduro's leadership and adds to the strain on neighboring countries.
Despite these challenges, Venezuela's oil industry continues to play a pivotal role in its relationship with the United States. Future policy changes could drastically alter these dynamics. As such, both nations must navigate this intricate web of economic dependence and political discord.
