US allows Venezuela to sell more oil as Iran war boosts prices

Summary

The U.S. Treasury eased sanctions on Venezuela’s state oil company and opened a channel for U.S. firms to buy Venezuelan crude more directly, framing the move as part of a broader effort to increase global oil supplies during the Iran war. The White House, meanwhile, said President Donald Trump will also waive for 60 days key requirements of the Jones Act, a U.S. shipping law that can affect the cost and availability of fuel shipments.

The actions come as Iran’s conflict with the United States and Israel has disrupted global energy flows, including by halting traffic through the Strait of Hormuz, through which one-fifth of the world’s oil typically passes, according to the Associated Press report. The report said the disruptions have pushed U.S. drivers toward the highest pump prices in about 2½ years: AAA reported the national average price for a gallon of regular gasoline topped $3.84 on Wednesday, up from $2.98 before the war began on Feb. 28.

The Treasury’s authorization is designed to allow PDVSA to sell Venezuelan oil to U.S. companies and also to sell on global markets, a shift described as significant after Washington had largely blocked dealings with Venezuela’s government and its oil sector for years. A Treasury official told The Associated Press that the license is intended to incentivize investment in Venezuela’s energy sector and to increase global supply, while also being structured to benefit both the U.S. and Venezuela; the official spoke on condition of anonymity.

Separately, the White House said Trump would waive Jones Act requirements for 60 days for goods shipped between U.S. ports to be moved on U.S.-flagged vessels. The Jones Act, a 1920s law designed to protect the American shipbuilding sector, is often blamed for raising the cost of shipping, and the waiver is expected to change how some fuel and other commodities move domestically during the Iran war.

Vice President JD Vance said the administration is responding directly to the pressure on consumers from rising gas prices. Speaking at an event in Auburn Hills, Michigan, Vance said, “Gas prices are up and we know they’re up. And we know that people are hurting because of it. And we’re doing everything that we can to ensure that they stay lower,” adding, “This is a temporary blip,” according to the AP report.

Even with sanctions easing, analysts cited by the AP said the changes may not quickly translate into lower prices at the pump. Geoff Ramsey, an expert on Latin America at the Atlantic Council think tank, said U.S. buyers and investment could see effects over time but that the outlook likely would involve “12 to 18 months before we see dramatic changes in Venezuelan output.” Claudio Galimberti, Rystad Energy’s chief economist, similarly suggested the market conditions were unlike anything normal, saying, “We are in the most abnormal market I can remember,” while forecasting that hostilities between the U.S., Israel and Iran could last at least two or three more weeks.

Galimberti also tied near-term price behavior to the Strait of Hormuz, saying that as long as the strait remains closed “we’re going to have a crisis.” He characterized oil and gas prices as likely to remain high and volatile until traffic resumes through the waterway, which the AP report said is central to global supply routing.

The AP report said Trump’s Jones Act waiver could offer only partial relief depending on where fuel is sourced and shipped within the U.S. Ramanan Krishnamoorti, vice president for energy and innovation at the University of Houston, said gas and diesel in some regions, such as the mid-Atlantic, may see some relief from larger ships being able to move between U.S. ports, but that places like Texas and Chicago likely would not feel much change.

Energy experts also cautioned that the consumer benefit from the shipping change could be small in the short term. David Goldwyn, a former Obama-era State Department special envoy focused on energy, told the AP that the Jones Act waiver might save consumers “three or four cents per gallon,” describing it as “pennies,” and said the administration’s combined market tweaks could create “buffers” for price hikes at least until late May. Goldwyn said the bigger risk for consumers is if the Strait of Hormuz remains closed beyond that point, warning that “Then the shortfall will increase significantly.”

The sanctions easing on Venezuela is also structured with limits, including how money from oil sales can flow. The AP report said payments cannot go directly to sanctioned Venezuelan entities such as PDVSA and must instead be sent to a special U.S.-controlled account—allowing trade but controlling cash flow. The report added that the license does not allow deals involving Russia, Iran, North Korea, Cuba and some Chinese entities, and it also said transactions involving Venezuelan debt or bonds would not be allowed, nor would payments in gold or cryptocurrency including the petro.

Critics, the AP report said, have argued that sanctions relief could reward Nicolás Maduro’s loyalists despite continuing repression, corruption and human rights abuses in Venezuela. The report said corruption and mismanagement and the effect of U.S. economic sanctions have contributed to a decline in production over time, with Venezuela’s output falling from about 3.5 million barrels per day in 1999 to less than 400,000 barrels per day in 2020, and added that inflation reached 475% in 2023, according to Venezuela’s central bank.

Garcia Cano reported from Caracas, Venezuela. Associated Press writers Seung Min Kim, Michelle L. Price and Matt Daly contributed to this report.