In this article, we delve into the Trump Administration’s approach toward Venezuela, focusing on its strategies and implications. With an emphasis on the quest for Venezuela’s rich oil and mineral resources, the current situation is marred by complexities that suggest both sides may be open to negotiations while also demonstrating a hardline stance. This dual approach raises questions about the future of U.S.-Venezuela relations and the potential impact on global energy markets.
Yves here. This post highlights the intriguing strategy of the Trump Administration, which is trying to leverage threats against Venezuela while simultaneously pursuing potential negotiations. A significant concern arises from Trump’s previous strategy using hefty tariffs against India as secondary sanctions; this approach proved counterproductive. Although he has made bold claims before—like those regarding Greenland—he may shift focus and count on the short attention span of American citizens to overlook past failures involving Venezuela. It is important to note that Trump has also had to navigate challenges with the Houthis, a far more serious threat to U.S. interests, albeit with limited military responses.
By Elias Ferrer, the director of a research advisory in Caracas, Venezuela focusing on the country’s oil and gas sector, Orinoco Research. Originally published at OilPrice
- Trump has issued threats against Venezuela and deployed Navy, Air Force, and special forces units to the Caribbean.
- Despite the tough rhetoric, both parties seem willing to engage in dialogue.
- Chevron’s waiver allows some U.S. oil to continue flowing, yet sanctions force around 85% of Venezuela’s oil to be sold to China at discounted rates.
Recently, President Trump took to Truth Social to issue a stern warning to Venezuela regarding the need to repatriate ‘prisoners and those in mental institutions,’ threatening incalculable consequences otherwise. This statement coincided with the deployment of various U.S. military assets to the Eastern Caribbean, including elite Special Operations forces, lending weight to his threats.
This deployment is underpinned by a narrative that frames Venezuela as governed by a ‘criminal organization’ known as the ‘Cartel de los Soles,’ led by Nicolás Maduro. Analysts suggest this rhetoric, shrouded in ‘counter-narcotics’ language, is part of a broader campaign to unseat Maduro from power.
The military has conducted strikes against three boats suspected of drug trafficking originating from Venezuela, although the commentary on the third attack notably avoided mentioning the country, highlighting growing concerns over the legality of such actions. While the Navy closes in on Venezuela’s coastline, targeting speedboats might be akin to firing warning shots during a heist.
At Guacamaya, we recently published findings that suggest the ‘Cartel de los Soles’ narrative is largely a politically driven story, often disregarding the complexities of actual drug trafficking. This narrative appears to be propagated by specific political and economic interests seeking regime change in Venezuela. Additionally, the changing use of terms like ‘Tren de Aragua’ and ‘Cartel de los Soles’ aligns with political needs and convenience.
Trump’s messages have consistently spotlighted the fentanyl crisis—responsible for 70% of overdose deaths in the U.S.—rather than Colombian cocaine. Moreover, only 5% of cocaine destined for the U.S. passes through Venezuela, according to the DEA. What Venezuela does possess are approximately 300 billion barrels of oil, 220 trillion cubic feet of gas, and significant deposits of precious minerals. As Caracas maintains a close alliance with Havana, it remains under the scrutiny of South Florida’s influential Cuban-American political community, led by Secretary of State and National Security Advisor Marco Rubio.
So, are we on the verge of an escalation in the conflict between the U.S. and Venezuela? Could full-scale war be imminent, or are both sides inclined to negotiate instead? And what ramifications would either scenario have on energy markets?
Interestingly, indications suggest both the White House and the Miraflores Palace may be willing to discuss terms. Trump’s post casts doubt on the ultimate goal: if Venezuela agrees to repatriate all deportees, might plans for regime change be reconsidered?
On the same day the article was published, Reuters reported that it had obtained a letter in which Maduro proposed direct negotiations with Trump through Presidential Envoy for Special Missions, Richard Grenell. Dated September 6, this letter suggests that some officials may have attempted to keep it under wraps.
An essential question lingers: The U.S. is currently sending two weekly flights full of Venezuelan migrants back home. By mid-September, this totaled 54 flights and 10,000 deportees, as indicated by a source within the State Department. Could ramping up the deportation flights provide a straightforward solution?
Similarly, in terms of drug trafficking, what if Maduro committed to combating cocaine transit? If Trump is primarily focused on fentanyl, addressing that issue could become significantly easier.
Beyond immigration and drug issues—real or alleged—energy remains a crucial topic in any dialogue between Washington and Caracas. Should negotiations resume, one can be assured that oil and gas will dominate the discussions.
The ongoing sanctions waiver for Chevron enables the company to operate in Venezuela, reportedly delivering around 80,000 barrels per day to the U.S., a significant drop from last year’s peak of 300,000 bpd under a previous permit.
The rationale for this special authorization is that Chevron needs to settle its debts. However, this creates an uncomfortable favoritism. On one side, other U.S. and European firms are questioning the exclusion from this arrangement. On the other, multiple creditors of Venezuela, including bondholders and arbitration award claimants, are waiting to reclaim at least $23 billion, not including the $70 billion owed to bondholders, a majority of whom are U.S. and European entities.
Another justification for Chevron’s license is that it allows the U.S. to maintain a presence in Venezuela, countering Beijing’s influence. However, the current sanctions framework has resulted in China receiving 85% of Venezuela’s oil exports at discounted prices. Additionally, a number of private Chinese companies have entered into contracts for crude extraction while U.S. and European investors remain blocked by Treasury Department sanctions.
Iran’s dark fleet has also reemerged, providing essential diluents after a period of absence when Chevron and other Western companies held licenses until late May of this year. Historically, the U.S. and Venezuela maintained a mutually beneficial relationship; the U.S. supplied refined petroleum products that made Venezuela’s extra-heavy crude exportable, which was then sent to Gulf Coast refineries.
The continued existence of the Chevron license raises an unanswered question: Is the White House preparing to escalate tensions, risking losing its last foothold in Venezuela? Or could it be negotiating to expand its economic influence while demanding better terms for American companies? Trump has previously sought deals for essential minerals and energy resources from countries such as Ukraine, the Democratic Republic of Congo, Syria, and Saudi Arabia.
