The midnight kidnapping of Venezuelan President Nicolas Maduro shocked the world on Saturday. Military helicopters bombed Caracas, the capital of Venezuela, while US special forces stormed Maduro’s residence, arrested him, and flew him to New York to stand trial on unproven charges of drug terrorism. President Donald Trump has provided several justifications for ousting Maduro, including the collapse of Venezuela’s oil industry. But the very conditions Trump referred to were exacerbated by the actions of previous US presidents – including Trump himself. If the Venezuelan oil industry is in dire straits, it is at least in part due to U.S. policies dating back at least a decade.
On Wednesday, the Trump-era Department of Energy released “Fact sheetIt states that the United States “is selectively lifting sanctions to enable the transfer and sale of Venezuelan crude and petroleum products to global markets.” This finding is doubly ironic because US sanctions are one of the reasons Venezuela’s oil industry is shrinking in the first place. The declaration also states that the United States will market Venezuelan oil, collect the proceeds, and distribute the proceeds “for the benefit of the American people and the Venezuelan people at the discretion of the United States Government.”
Maduro first drew the ire of President Trump in 2017 after the Venezuelan government stripped the powers of the opposition-controlled legislature and violently suppressed mass protests. Trump responded by imposing sanctions on Maduro, several senior officials, and Venezuela’s state-owned oil company, expanding targeted sanctions first imposed by the Obama administration in 2015. Speaking to reporters at his golf club in Bedminster, New Jersey, in August of that year, Trump said he would not rule out a “military option” in Venezuela.
Two years later, after Maduro secured a second term in a disputed election, the Trump administration dramatically escalated the pressure campaign, announcing a complete oil embargo on the country. Venezuela has the largest proven oil reserves in the world and produces a type of heavy crude that is used in the manufacture of diesel fuel and petrochemicals. At that time, the United States received approximately 40% of Venezuelan oil exports. The embargo not only cut off that trade, but also cut off exports to European Union countries, India, and other allies of the United States. Suddenly, Venezuela was largely cut off from global markets.
By the time the sanctions began, Venezuela’s oil production was already declining. The decline in oil prices in the early 2010s caused instability in an industry that had long suffered from mismanagement, corruption and lack of investment. But the sanctions dealt a devastating blow.
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“When they cut off the government’s ability to export its oil and access international financing, it all went downhill from there,” said Mark Weisbrot, co-director of the Center for Economic and Policy Research, an economic policy think tank. “It was economic violence to punish Venezuelans.”
Even as global oil prices rise again, sanctions have limited Venezuelan exports and prevented the country from rebuilding its oil sector. With few buyers and little access to financing or technology, oil production collapsed by about 80% by the end of the decade, compared to its peak in 2012. Most of those sanctions have remained in place under the Biden administration, and experts say the cumulative effect has been the near-total collapse of Venezuelan oil production — damage that President Trump is now using as justification for his military strike against the country this week.
While the exact motives of the Trump administration are not entirely clear, the president described Venezuela’s oil industry as “totally depressed” in interviews following the US arrest of Maduro.
“They pumped almost nothing compared to what they could have pumped and what could have happened,” Trump said Saturday. He added that American oil companies will spend billions of dollars “to repair the severely damaged infrastructure, the oil infrastructure, and start making money for the country.”
But there are few signs that oil companies are keen to return. For example, prices are hovering around $60 per barrel, which is roughly the break-even point for many companies. Without political stability, major oil companies are unlikely to commit the billions of dollars needed to resume production in Venezuelan oil fields. Trump administration He reportedly scheduled a meeting with oil companies Later this week to discuss the possibility of re-entry. Currently, Chevron is the only American company with active operations in the country.
Sanctions have reshaped the global flow of oil. When the United States banned Venezuelan oil, US Gulf Coast refineries specializing in heavy crude oil turned to oil New suppliers in Colombia, Mexico and Argentina. Elsewhere, countries have increasingly relied on Venezuelan oil Switched to Russia. last Oil-producing countries also increased their production To compensate for the decline in exports from Venezuela.
The sanctions also had ripple effects beyond the oil sector. By cutting off Venezuela’s ability to access international finance, these sanctions have dealt a heavy blow to an economy that relies heavily on imports. Unable to borrow, the country struggled to purchase basic necessities such as food and medicine. At the same time, the oil embargo prevented the export of its most profitable assets. The result was a stranglehold on the country’s economy, leading to poverty and deaths. Patients with HIV, diabetes and high blood pressure were unable to access life-saving medications. One study at the time estimated this About 40,000 additional deaths This can be attributed to the economic conditions caused by sanctions.
“When you can’t get the things you need to produce electricity and clean water, all kinds of diseases exacerbate,” Weisbrodt said.
Even before the recent attacks against Venezuela, the sanctions imposed by the United States on the country were described as… “Economic war” by a former UN rapporteur And other international law experts. While it is unclear how the Trump administration plans to move forward, restoring the semblance of a functioning economy in Venezuela and undoing the damage done by previous U.S. policy could take decades.