Trump to punish buyers of Venezuelan oil with tariff, extends wind-down of Chevron license

Washington: US President Donald Trump said on Monday that any country buying oil or gas from Venezuela will pay a 25% tariff on trades with the United States, while his administration extended a deadline for US producer Chevron to wind down operations in the South American country.

Punishment through tariffs for foreign buyers of Venezuela's oil could have a similar effect to secondary sanctions on Venezuela that were imposed under Trump's first government in 2020 and hit the OPEC country's exports, forcing price discounts.

However, in an expected move, Trump's government also said it would wait seven more weeks until May 27 before terminating a license that the US has granted to Chevron since 2022 to operate in sanctioned Venezuela and export its oil to the United States.

The extension would secure payments to Chevron for oil cargoes delivered to US customers, while avoiding a collapse in crude volumes exported from Venezuela in coming weeks, especially to the United States, according to analysts and sources.

The two moves taken together temporarily focus Trump's pressure on buyers other than the United States, though it is uncertain how his administration will enforce the tariff.

The US Treasury Department had initially given Chevron 30 days from March 4 to wind down the license after Trump accused President Nicolas Maduro of not making progress on electoral reforms and migrant returns.

As part of his announcement on the tariff, Trump said Venezuela has sent "tens of thousands" of people to the United States who have a "very violent nature."

Trump, who has made illegal migration one of the top priorities of his administration, earlier this month invoked the 1798 Alien Enemies Act to justify the deportation of alleged members of Venezuelan gang Tren de Aragua without final removal orders from immigration judges.

Chevron and Venezuela's government did not immediately respond to requests for comment.

Trade Reshuffle

In a post on Truth Social, Trump said the "secondary tariff" to be imposed on buyers of Venezuelan oil would take effect on April 2.

Oil prices rose 1 per cent on Monday on the tariff announcement, although the gains were capped as the US extended the wind-down period of the Chevron license.

Oil is Venezuela's main export and China, which is already the subject of US tariffs, is the largest buyer. In February, China received directly and indirectly some 503,000 barrels per day of Venezuelan crude and fuel, which represented 55% of total exports.

Tariffs imposed by China on imports of certain types of Venezuelan oil in past years led to a decline in the volume of Venezuelan crude received by Chinese buyers, which ultimately forced state company PDVSA to widen price discounts to continue selling to its most important market.

India, Spain, Italy and Cuba are other consumers of Venezuelan oil. U.S. imports of the oil are set to end May 27.

US Secretary of State Marco Rubio earlier this month said foreign buyers of Venezuelan oil would soon be notified of a policy change, but many joint-venture partners of PDVSA continued taking cargoes this month, according to company documents.

The state company is also readying a plan to reorganize operations at its largest joint venture with Chevron, the Petropiar project at the Orinoco Belt, and secure oil exports from there.

President Nicolas Maduro has rejected US sanctions, saying they are illegitimate measures that amount to an "economic war" designed to cripple Venezuela. But he has cheered what his government says is the country's resilience despite the measures.