Venezuela

Venezuela holds the world's largest proven crude oil reserves, estimated at over 300 billion barrels, concentrated in the Orinoco Belt. Production collapsed from around 3 million barrels a day in the late 1990s to under 800,000 barrels a day by the mid-2020s under a combination of US sanctions, investment flight, and state-company decay at PDVSA. The country has been under a layered US sanctions regime since 2019, with OFAC General Licenses (notably GL 41 and successors) carving out specific exemptions for Chevron and a handful of other operators under conditions that vary with each renewal.

Venezuela is an OPEC member and Maduro government-aligned with Russia and China. Its crude flows primarily into the discounted sanctioned-barrels market served by Chinese buyers and dark-fleet tankers, a pattern it shares structurally with Iran. The bilateral Venezuela-Cuba energy alliance that defined Caribbean political economy through the Chávez era was functionally inactive from November 2025, four months before the March 2026 PDVSA Treasury authorisation previously cited as the proximate cause of Cuba's supply collapse. Nicolas Maduro was captured by US forces under Operation Southern Spear in January 2026; the political transition and its effect on PDVSA operations remains unsettled.

Venezuela's relevance to European oil markets is primarily through the OFAC sanctions architecture that governs its crude exports, which runs in parallel with, and in deliberate contrast to, the Iran sanctions file. Between 27 March and 8 April 2026, OFAC issued new and amended Venezuela-related general licenses while issuing zero Iran-related actions over the same 22-day window . The asymmetry is a policy signal: the Trump administration is actively maintaining the Venezuela sanctions architecture while the Iran file sits dormant through an active war. European traders and compliance teams track Venezuelan GL renewals as a barometer of OFAC's willingness to sanction-manage active geopolitical situations.

Venezuela's Merey heavy crude (Orinoco Belt) is a competing supply for European heavy-crude refinery configurations, particularly in Spain and the Netherlands. Under normal conditions it competes with Canadian heavy crude and Iraq Basra Heavy for Atlantic Basin refinery slots. Under current OFAC restrictions, European buyers require specific licences to transact Venezuelan crude, limiting direct flows but creating basis differentials relevant to crude-oil pricing on the ARA strip.

Venezuela's central role in Cuban energy supply inverted on 13 May 2026 when Cuban Energy Minister Vicente de la O Levy told Mesa Redonda that Venezuelan crude shipments to Cuba had been interrupted since November 2025, four months before the 18 March 2026 PDVSA Treasury authorisation previously framed as the proximate cause. The admission inverts the causal chain: the 18 March order ratified a flow that had already stopped. Possible upstream causes, none confirmed, include PDVSA operational degradation, Cuban inability to pay in convertible currency, or redeployment of Caracas's shadow-fleet Chinese tankers to Asian Brent buyers as Hormuz disruption widened the spread. Russia's Sovcomflot has been Cuba's sole active supplier since November 2025.

Venezuela's continued OFAC engagement throughout the Iran war serves as the control case proving Iran silence is deliberate. The Trump administration issued new and amended Venezuelan general licenses on 27 March and 8 April 2026 while issuing zero Iran-related OFAC actions over the same 42-day war window. Venezuela and Iran occupy the same structural position in the sanctions-discount crude market, both selling primarily to China and operating through dark-fleet tanker networks.