Market News

The Trump administration issued a general license expanding the ability of oil companies to operate in Venezuela, marking a significant step to ease sanctions under the new US-backed leadership in Caracas.

The license issued by the US Treasury Department Thursday covers a variety of activities that could expedite the movement of Venezuelan crude, including exporting, selling, storing and refining that oil, as long as the work is performed by a US entity. According to an administration official, it does not cover upstream crude production inside the country where currently just one US oil company — Chevron Corp. — operates under a special US license.

The authorization comes after Venezuelan lawmakers approved a historic reform of the country’s hydrocarbons policy, which some US oil executives had described as essential to launch operations there. President Donald Trump has said he expects US energy companies to pour billions into reviving the country’s oil sector, where infrastructure has decayed following years of underinvestment and corruption.

The move reflects the White House’s desire to quickly get Venezuela’s economy moving after the US capture of former President Nicolás Maduro, a person familiar with the matter said.

Yet the full impact of the change could be limited because of restrictions embedded in the license, including a prohibition on transactions with Chinese-tied entities. China had been a major buyer of sanctioned — and therefore steeply discounted — Venezuelan crude before Maduro’s capture.

“This looks like the first obvious and needed step to pave the way for energy companies to do business in Venezuela,” said Clayton Seigle, a senior fellow at the Center for Strategic and International Studies in Washington. “It basically waives the prohibition on working with” Petroleos de Venezuela SA, the country’s state oil company, to handle the country’s crude, he said.

However, payments to PDVSA still “need to go through US-controlled accounts, and working with Chinese-controlled Venezuelan ventures is off limits,” Seigle said.

The license also specifies that US laws govern contracts and that disputes under them must be resolved within the US.

The Treasury Department is also requiring a “detailed report” on transactions in which Venezuelan oil is ultimately sold or sent to other countries — another potential deterrent.