Skip to content
Welcome, thoughtbot's Giant Robots listeners!Start here
Russia-Ukraine War 2026
19JUL

Trump frees Venezuela oil; Hormuz shut

4 min read
13:35UTC

Two emergency supply-side measures in a single day — Venezuelan crude authorisation and a Jones Act waiver — join a growing list of marginal fixes for a disruption measured in millions of barrels per day.

ConflictDeveloping
Key takeaway

Venezuela's collapsed production capacity means this authorisation adds marginal barrels, not a supply solution.

The administration took two actions on 19 March to contain oil prices. The Treasury issued a broad authorisation for Venezuela's PDVSA to sell crude on global markets, with payments routed through a US-controlled account⁠1. Trump separately waived the Jones Act for 60 days, suspending the requirement that energy cargoes shipped between American ports travel on US-flagged vessels⁠2. Neither measure was accompanied by a volume target or explanation of expected impact.

Venezuela holds the world's largest proven crude reserves — an estimated 300 billion barrels — but production has collapsed from roughly 3.3 million barrels per day in the late 1990s to approximately 900,000 bpd under two decades of mismanagement, underinvestment, and sanctions. Even with full authorisation, Venezuela lacks the rigs, skilled workforce, and pipeline infrastructure to raise output meaningfully within weeks. Any gains would take months and measure in the low hundreds of thousands of barrels — a fraction of the 17 million barrels per day that transited Hormuz before the closure. The US-controlled payment structure also limits Caracas's incentive: Maduro gains sanctions relief but not full revenue sovereignty.

The Jones Act waiver addresses a narrower problem. The 1920 Merchant Marine Act restricts US coastal shipping to American-built, American-owned, American-crewed vessels — a constraint that creates artificial scarcity on domestic routes during supply disruptions. The 60-day suspension allows foreign-flagged tankers to move oil between American ports, easing redistribution of existing supply. It adds no new barrels to the global market.

This is the fourth supply-side lever the administration has pulled in a week. Trump waived Russian oil sanctions on 15 March, drawing objections from six of seven G7 members and a warning from Zelenskyy that it could hand Moscow $10 billion. Treasury Secretary Bessent acknowledged that Iranian tankers were being allowed through Hormuz to "supply the rest of the world". Now Venezuela and the Jones Act. Each measure works at the margin. None addresses what US Navy officials described as an Iranian "Kill box" at Hormuz, where daily commercial transits have fallen to single digits against a pre-war average of 138. The seven-nation Hormuz statement published hours later committed no warships and set no timeline. The administration is reaching for every available lever except the one that would require either military de-escalation or the allied naval commitment no country has been willing to provide.

Deep Analysis

In plain English

The Jones Act is a 1920 law requiring goods shipped between US ports to travel on American-built, American-crewed vessels. It protects US maritime workers but raises the cost of moving energy between domestic ports in a crisis. Waiving it for 60 days allows cheaper foreign ships to carry oil and gas between, say, Louisiana refineries and the US Northeast — easing distribution bottlenecks at the margin. Separately, authorising Venezuela's state oil company PDVSA to sell on global markets is a significant policy reversal: Trump's first term was defined by maximum-pressure sanctions on the Maduro government. But Venezuela's production has collapsed from 3.3 million barrels per day in the late 1990s to roughly 800,000 today. Neither measure can replace the volume lost through the Hormuz closure — that gap is measured in millions of barrels per day.

Deep Analysis
Synthesis

The two measures together reveal the limits of executive energy tools: the president has authority over trade law and sanctions but no mechanism to physically replace blocked maritime supply routes. The political economy is equally revealing. Authorising Maduro's Venezuela — a government Trump spent his first term isolating — signals that energy price management has overridden ideological foreign policy consistency, establishing a precedent hierarchy that will reduce future sanctions credibility with targeted regimes.

Root Causes

Venezuela's production collapse reflects a decade of PDVSA mismanagement, US sanctions, and chronic underinvestment — degradation that export authorisation alone cannot reverse. Even full sanctions removal would require 18–24 months of capital investment and technical rehabilitation before meaningful production increases could materialise.

What could happen next?
  • Consequence

    The Venezuela authorisation restores Maduro regime revenue at peak oil prices, directly undermining years of US maximum-pressure economic policy.

    Immediate · Assessed
  • Risk

    If neither measure demonstrably reduces domestic fuel prices within 30 days, political pressure for more aggressive tools — SPR releases, price caps — will intensify.

    Short term · Suggested
  • Precedent

    Energy price control superseding sanctions policy establishes a hierarchy of priorities that will reduce future sanctions credibility with targeted regimes.

    Medium term · Assessed
  • Opportunity

    US Gulf Coast refiners configured for Venezuelan heavy crude gain a feedstock cost advantage if PDVSA exports increase, even modestly.

    Short term · Suggested
First Reported In

Update #42 · Iran hits four countries; Brent at $119

PBS· 20 Mar 2026
Read original →
Causes and effects
This Event
Trump frees Venezuela oil; Hormuz shut
The administration has now pulled four distinct supply-side levers in one week (Russian sanctions waiver, allowing Iranian tankers through Hormuz, Venezuela authorisation, Jones Act waiver) without arresting the price climb. The cumulative potential of all four is a fraction of the roughly 17 million barrels per day that transited Hormuz before the war. The pattern reveals the structural limits of supply-side policy when the core bottleneck — a closed strait — remains unresolved.
Different Perspectives
Bulgarian government
Bulgarian government
Bulgaria's Prime Minister, Rumen Radev, said the sinking of HS Dignity "benefits the Russian Federation" while saying Bulgaria lacked solid evidence to accuse anyone, and Defence Minister Dimitar Stoyanov asked NATO for air defence on 16 October. The request comes from a government that stopped state military aid to Ukraine in June.
Radoslaw Sikorski
Radoslaw Sikorski
Poland's foreign minister challenged Elon Musk on X after SpaceX capped Ukraine's Starshield terminals on 14 October. Poland pays about $50m a year for Ukraine's Starlink subscriptions, so Warsaw speaks as the paying customer as well as the ally.
Andy Burnham
Andy Burnham
Burnham fast-tracked £10m of a £45m air-defence missile delivery when Zelenskyy visited London on 14 October, and his ministers are lobbying allies to ban maritime services for Russian liquefied natural gas. The measure targets insurers and shipowners, many of them in London, rather than the gas itself.
Ministry of External Affairs (India)
Ministry of External Affairs (India)
India's foreign ministry said after the 16 September House vote that New Delhi would take all necessary measures to protect its trade.
European Council
European Council
EU leaders on 15-16 October rejected a US idea to hand Washington the roughly €200bn of frozen Russian assets held in Europe, and Kaja Kallas said the decision belongs to Europeans. The same summit put off a decision on financing Ukraine, saying leaders "will revert to the issue in a timely manner".
Donald Trump
Donald Trump
Trump signed the 16 October order that sets the Graham Act's duties and waives them under section 115(a), with a certification sent to Congress. He says the United States has not stopped sharing intelligence with Ukraine, and on 11 October he said both sides had agreed to halt attacks on energy infrastructure.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.