Trump, Venezuela's Economy, and the Shadow of Oil Sanctions

By Misión Verdad – Jan 21, 2025

Donald Trump has returned to the Oval Office for a second term and, just hours after being sworn in as president, he began signing dozens of executive measures in the area of domestic US policy.

The president was asked if he would take measures to try to overthrow Venezuelan President Nicolás Maduro.

Trump replied: “We’ll find out later. We’re probably going to stop buying oil from Venezuela; we don’t need their oil.”

The Republican said that “there could be another (oil) embargo” and that preventing the purchase of Venezuelan crude “would change Venezuela a little.” He also said that he was following the Venezuelan issue “with great interest.”

Hours before Trump’s statements, Richard Grenell, Trump’s envoy for special missions, wrote from his X account that he had been in contact with Venezuelan authorities.

“Donald Trump is again the president of the United States and diplomacy is back,” wrote Grenell. “I have spoken with several officials in Venezuela today and will begin meetings tomorrow morning. Talking is a tactic.” The statement confirms that communication channels are active between both governments, for the moment without the interference of Marco Rubio, who has already been confirmed as Secretary of State.

The statements of the US president, once again, open a range of possibilities in terms of tightening the illegal sanctions against the Venezuelan economy. However, since it is only a statement, and in the absence of concrete measures, it is not clear how and when such measures can be implemented.

Meanwhile, Trump has not spoken about the fate of the oil licenses nor about the future of Chevron’s investments in Venezuela. It is also not clear whether the United States will veto the purchase of Venezuelan crude oil for the US market or whether, to avoid losses for the transnational company, it will allow it to be sold in other markets.

Everything remains to be seen, and it seems that the dialogue between both governments will largely define the course of events.

Can the Venezuelan economy be resilient if faced with an intensification of illegal oil sanctions?
To clarify this point, it is necessary to start from the assertion that, despite the high economic and social costs, the Venezuelan economy of the 2017-2019 period proved to be resilient to the measures of the first Trump government.

However, the Venezuelan economy of early 2025 is far from that of those years, since the economic metabolism has changed substantially in various sectors.

‘Maximum Pressure’ on Venezuela Contradicts Trump’s Migration Agenda

1. Less dependence on the relationship with the US
Last November, it was reported that Venezuela remained for the second consecutive month as the third supplier of crude oil to the United States, after Canada and Mexico, surpassing other nations such as Brazil and Saudi Arabia, according to the US Energy Information Administration (EIA).

Until November, with the help of Chevron, Venezuela placed some 261,000 barrels per day on US soil.

However, President Nicolás Maduro announced that the country has already surpassed the production threshold of one million barrels of crude oil per day. “The oil industry already has an average, in the month of January, of 1,057,000 barrels of oil per day,” a goal that was reached “with our own efforts,” he said last Monday, January 20, in a new meeting of the National Council of Productive Economy, together with Venezuelan businessmen.

According to OPEC’s monthly oil report, by last October, these numbers achieved their historical high over the past four years by reaching 950,000 barrels per day.

The clear difference in the figures of national production and export, compared to the amount supplied to the United States, suggests that Venezuela continues sending the majority of its crude to other markets, especially Asia, in many cases under discount conditions and in a manner that evades the blockade.

The significance of the crude oil exported to the United States, compared to the overall production of the country, is much lower than that which existed in 2017, when the most aggressive measures against the Venezuelan publicly owned petroleum company PDVSA began.

In early 2017, Venezuela exported 718,365 barrels per day of crude to the United States; this was equivalent to 39% of its production, which was then 1,837,000 barrels per day.

At present, Venezuela is sending only 26% of its production to US soil.

The data do not suggest that the Venezuelan economy would not be affected by new sanctions, but they do indicate that the overall damage to the economy could be less when compared to the 2017-2019 period.

2. Changes in the Venezuelan economy
The Venezuelan economy of 2025 is not the same economy that Donald Trump sanctioned during his first administration.

One of the most characteristic elements of today is the exchange system. It is a floating system that has contained exchange rate volatility. In addition, the role of the state has changed: it is no longer the main provider that satisfies the demand for foreign currency.

Recently, Vice President Delcy Rodríguez stated that the state contributes 33% of the flow of foreign currency to the exchange market, while the private sector and civil society contribute the remaining 77% through various types of operations.

Compared to 2016—prior to Trump’s first measures against PDVSA—the exchange market was 98% supported by the state through exchange-control policies. The situation was radically different then.

Another element to consider is the state of the Venezuelan economy today.

The oil sector, while still very significant, is less relevant to the economy as a whole than it was in 2016.

During 2024, the entire Venezuelan economy grew by 9%. Meanwhile, various sectors demonstrated a boost in their activity, such as construction, which increased by 25%. Mining increased by 21%, and agricultural and livestock activity increased by 6.2%.

Trade grew by 6.2%, and the manufacturing sector grew by 4.6%, according to data provided by President Maduro in his Annual Message to the Nation for 2024.

Oil activity had a significant boost of 14% at the end of 2024. Although hydrocarbon activities had an impact on the other sectors, it is also true that other factors were part of the growth trend.

The rise in these sectors is not absolutely linked to the state budget; in reality, it is the result of the dynamics arising from Maduro’s economic policy, one of which is the increase in the amounts authorized for credit activity.

Maduro said in his Annual Message to the Nation that credit activity increased by 72%. This important boost to banking activity has led to a greater flow of working capital for investments and for the specific consumption of goods, which helps to explain the upturn in industrial, agricultural, commercial, and, especially, construction activities.

3. The state is less vulnerable
Much of the social impact that Trump’s measures had in Venezuela during his first term was due to the state’s great dependence on the oil source as a fundamental resource base.

However, the Venezuelan government has changed its tax policy and made it more effective during these years, managing to become less dependent on oil.

In 2020, when the Venezuelan economy was extremely affected due to sanctions, the national treasury collected the equivalent of about US $1.6 billion dollars, but at the end of 2024, the collection reached the equivalent of about US $12.1 billion, which has provided the government a much greater range for maneuvering than it had when, in 2020, 99% of the nation’s foreign exchange income was lost due to illegal sanctions.

Impacts, but of what kind?
The agenda of [maximum] pressure against Venezuela could become clear very soon and, without a doubt, any measure that involves the intensification of illegal sanctions will generate impacts on the Venezuelan economy.

However, given the changes in the internal economic dynamics in Venezuela and the country’s adaptation to the blockade in recent years, it is important to analyze how significant these impacts would be and whether the internal economy will be able to maneuver them.

Regime change is the main purpose of sanctions as a mechanism of large-scale economic warfare.

Consequently, the levels of resilience of the Venezuelan economy are yet to be determined. Similarly, it is unclear whether the eventual coercive measures applied in 2025 will be able to achieve the political objectives that were not achieved when they were implemented years ago, when the economic body was much more vulnerable and dependent on oil than it is now.

(Misión Verdad)

Translation: Orinoco Tribune

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