Trump’s Energy Sanctions on Iran & Venezuela | Shale Magazine

U.S. President Donald Trump has doubled down on existing energy sanctions on both Iran and Venezuela. The two oil-rich countries have gradually increased their oil production in recent years and exported oil and gas via clandestine routes. Trump plans to clamp down on Iran and Venezuela, making it more difficult for the two countries to profit off energy export revenues. Meanwhile, reports suggest the U.S. president may offer Russia a possible sanctions relief.  

Trump to Tighten Rules on Venezuelan Oil

In the last week of February, oil prices increased by more than 2% after President Trump revoked a license that allowed the U.S. oil major Chevron to operate in Venezuela. Chevron will no longer be permitted to export Venezuelan crude. In addition, Venezuela’s state-owned oil company PDVSA will not be allowed to export oil previously exported by Chevron to U.S. refineries.  

The tightening of sanctions could encourage Chevron to seek a new deal with PDVSA to export crude to countries other than the U.S. Chevron was exporting around 240,000 barrels per day (bpd) of oil from its operations in Venezuela, equating to over a quarter of the South American country’s current crude output.  

“The U.S. government has made a damaging and inexplicable decision by announcing sanctions against the U.S. company Chevron,” Venezuelan Vice President Delcy Rodriguez said in a statement. 

Venezuela was once one of the largest oil-producing countries in Latin America. However, the introduction of sanctions on PDVSA during Trump’s first term as president made Venezuela’s oil output decrease dramatically.

Venezuela produced an average of 3.2 million bpd of oil in 2000, which fell to 735,000 in September 2023. Meanwhile, its crude exports to the U.S. fell from 1.3 million bpd in 2001 to 153,000 bpd in July 2023, when sanctions were eased under the Biden administration. 

Trump blamed the decision to tighten sanctions on Venezuelan President Nicolas Maduro’s failure to progress on electoral reforms and migrant returns. Trump stated, “The regime has not been transporting the violent criminals that they sent into our Country (the Good Ole’ U.S.A.) back to Venezuela at the rapid pace that they had agreed.” 

Stricter Sanctions in Iran

Earlier in February, President Trump reinstated his “maximum pressure” approach to Iran. Trump signed a presidential memorandum reimposing the same strict policy on Iran that he implemented during his first term in office. “With me, it’s very simple: Iran cannot have a nuclear weapon,” Trump stated.

The memorandum directs the Treasury and State Departments to carry out a campaign aiming to reduce Iran’s oil exports to zero. However, he also suggested that he was open to a deal with Iran. 

Trump accused former President Joe Biden of not enforcing strict U.S. sanctions on Iranian energy, which, he suggests, allowed it to fund its nuclear program. Iran is “dramatically” accelerating enrichment of uranium to up to 60% purity, close to the roughly 90% weapons-grade level, according to the chief of the U.N. nuclear watchdog. However, Iran has denied plans to develop a nuclear weapon. 

Iran’s oil exports to China, which does not adhere to U.S. energy sanctions, have risen in recent years. China has found several ways to circumvent sanctions, such as using shadow tankers and a network of middlemen, which have allowed the Asian giant to buy discounted crude from several sanctioned countries. 

Possible Sanctions Relief for Russia

One country where Trump appears less intent on strengthening sanctions is Russia. Trump praised his talks with Russian President Putin last month and promised “major economic development transactions” with Moscow. 

The Biden administration worked with Europe to impose sanctions on Russian energy following Russia’s invasion of Ukraine in early 2022. After almost three years, several countries that previously depended heavily on Russian oil and gas have shifted their reliance away from Moscow, thereby significantly reducing Putin’s energy exports and hitting the country’s revenues hard.  

This month, the U.S. is reportedly drafting a plan to provide Russia sanctions relief as Trump aims to restore the U.S. relationship with Moscow, according to a U.S. official. The White House has reportedly requested that the State and Treasury departments draft a list of sanctions that could be eased for U.S. officials to discuss with Russian representatives in the coming days.  

Just before leaving office, Biden introduced Washington’s toughest yet measures on Russia. Despite initially threatening to increase sanctions on Russia if Putin did not agree to enter negotiations to end the conflict with Ukraine, Trump administration officials have since acknowledged the potential for easing sanctions on Russia. Trump has effectively made a U-turn on the Biden administration’s approach to Russia, as he once again opens the channels of communication with Putin.

The uncertain outlook for U.S.-Russian relations has led the EU to approve a new sanctions package against Russia. “We now have the most extensive sanctions ever, weakening Russia’s war effort,” stated the EU’s top diplomat Kaja Kallas. The latest move by the EU suggests the region’s steadfast stance on Russia-Ukraine and opposes any plans Trump may have to ease sanctions on Moscow. 

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