Venezuela Oil Embargo: How US Sanctions Work and What They Mean for Gas Prices

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On January 6, 2026, Secretary of State Marco Rubio announced that the United States would keep the oil embargo to force Venezuela to make specific changes. Three days earlier, American special forces had captured Venezuelan President Nicolás Maduro in what remains one of the most audacious military operations since the Iraq invasion. Rubio’s answer: the oil stays locked down until Venezuela stops drug trafficking, kicks out Iranian operatives, and holds actual democratic elections.

For Americans filling up their tanks, the immediate impact is basically nothing. Gas prices averaged $2.81 per gallon that week, near pandemic-era lows. Venezuelan oil represents less than one percent of global supply right now.

Venezuela sits on 17 percent of the world’s proven oil reserves. What happens there over the next decade could reshape global energy markets in ways that hit your wallet.

Two Decades of Escalating Pressure

The U.S. banned weapons sales to Venezuela back in 2006 under George W. Bush, citing poor counterterrorism cooperation. Obama went after individual officials in 2015, targeting people responsible for human rights abuses and jailing protesters. The first Trump administration prohibited bond trading in 2017, then went after PDVSA—the state oil company—in January 2019. That move froze $7 billion in assets and cut off the country’s ability to get paid for oil exports to the United States.

The full oil embargo came on April 28, 2019. Combined with penalties against foreign companies that trade with Venezuela, it created what Treasury officials called a “quarantine” on crude from that country.

Biden’s administration believed the embargo had failed to produce regime change and was causing humanitarian damage without achieving its goals. In October 2023, they temporarily lifted some sanctions in exchange for promises about free elections and releasing political prisoners. Chevron got authorization to increase production, reaching 294,000 barrels per day by January 2025—the highest level since resuming operations.

Maduro held what international observers called a fraudulent election in July 2024. Biden reinstated restrictions but kept waivers for Chevron and other international companies. Trump, returning to office, revoked Chevron’s license entirely in February 2025.

How Oil Sanctions Work

When the Treasury’s Office of Foreign Assets Control (OFAC) officially blocks companies like PDVSA, American individuals and companies can’t do business with them. U.S. companies operating overseas and foreign companies using dollars or banks in the United States are bound by the same rules.

Companies must report blocked assets within ten business days. This includes insurance, shipping fees, letters of credit, and financing arrangements—everything needed to move petroleum becomes off-limits.

Foreign companies face penalties for trading with sanctioned entities. Companies that trade with sanctioned entities lose access to U.S. banks and dollar transactions. For most global firms, they need dollar transactions and banking relationships in the United States more than they need this particular oil.

Venezuela uses hidden tanker networks to evade the embargo. The country developed networks of tankers operated through fake companies, with constantly changing ownership structures and tankers with turned-off tracking systems. In December 2025, Treasury sanctioned four companies and four tankers—NORD STAR, ROSALIND, DELLA, and VALIANT—after determining they’d transported crude despite the embargo. The designation blocked all their property in U.S. jurisdiction and prohibited persons in the United States from dealing with them.

Major banks cut ties with anyone involved in this trade to avoid legal problems.

Rubio’s Enforcement Strategy

Rubio’s January 6 statements presented the policy as economic pressure rather than military action. “We continue with that quarantine,” he told CBS News, “and we expect to see that there will be changes, not in the way the oil industry is run for the benefit of the people, but also so that they stop the drug trafficking.” Three conditions: transform the petroleum sector to benefit citizens, stop drug trafficking, expel Iranian influence.

The blockade on sanctioned tankers “remains in place, and that’s a tremendous amount of leverage that will continue to be in place until we see changes,” Rubio said. He said the U.S. would judge cooperation by actual results: stopping drug flows, expelling Hezbollah, halting migration, destroying narco-terrorist groups, restoring human rights.

Why Gas Prices Aren’t Jumping

The country has the world’s largest proven reserves—roughly 303 billion barrels. The crude is extra-heavy oil from the Orinoco Belt, thick and hard to pump, and contains high sulfur. It requires expensive extraction technology and specialized refining.

Production has collapsed from 3.7 million barrels per day in the early 1970s to approximately 0.8 to 1 million barrels per day currently, representing less than one percent of global supply. This is due to government takeover, mismanagement, corruption, lack of investment, and sanctions. Meanwhile, U.S. production hit 13.4 million barrels daily as of late 2024, making the United States the world’s largest producer.

Current U.S. imports from Venezuela: zero. Biden’s temporary relief allowing Chevron operations had brought in 294,000 barrels daily, but Trump killed it. Rubio’s enforcement announcement wasn’t removing oil from markets—it was maintaining the removal that’s been in place for years.

Russia produces eleven percent of global oil. The Middle East produces far more. Oil markets are global and interchangeable. A one-percent player doesn’t move prices much, especially when that one percent has been mostly offline for years.

When Rubio made his announcement, crude was trading around $56-57 per barrel. Market analysts noted minimal reaction. Traders expected little supply impact because Trump had explicitly said the embargo stays in place.

Gas prices averaged $2.81 nationally in early January 2026, near pandemic-era lows. Global markets are oversupplied. U.S. shale production, Middle Eastern output, and non-sanctioned producers provide enough crude flowing that losing these barrels doesn’t create shortages.

GasBuddy analyst Patrick DeHaan told reporters that any significant impact on fuel costs in the United States would take years and would depend on whether Trump lifts sanctions and allows massive infrastructure investment. Rebuilding production to historical levels would require an estimated $100 billion over a decade, according to energy experts at Rice University’s Baker Institute.

China’s Role in Sanctions Evasion

China emerged as the primary purchaser of sanctioned crude, importing through state-owned trading companies and intermediary arrangements designed to obscure direct connections. They move oil between ships in international waters, send it through other countries’ ports, and use middlemen to hide the origin.

Between 2014 and 2025, sanctions on Russian, Iranian, and Venezuelan oil collectively removed millions of barrels daily from global markets. China bought the overwhelming majority of what continued flowing despite sanctions.

The Trump administration penalizes companies that trade with sanctioned entities to shut down these smuggling networks. Treasury has designated multiple companies and tankers for petroleum trade, warning of further penalties. When Trump’s Treasury applied full blocking sanctions to Russia’s Rosneft and Lukoil in October 2025—representing 50 percent of Russian oil exports—India and China cut back at first but then found ways around the sanctions using middlemen and creative financing.

The Atlantic Council’s analysis emphasized that enforcement requires working with other countries to stop the secret tanker networks. Rubio focused on blocking tankers rather than working with other countries. That suggests the U.S. will act alone rather than coordinating with allies.

Conditions for Lifting Sanctions

Trump suggested in public remarks that oil companies in the United States would be “eager for the opportunity to drill for heavy crude.” But eagerness requires more than opportunity—it requires political stability, functioning institutions, and economic conditions that justify multi-billion-dollar investments.

Maduro is officially labeled a narco-terrorist. The country has no established democratic institutions post-capture. No major oil company is writing checks for infrastructure projects under these conditions, regardless of what sanctions policy says.

If companies eventually invested enough to rebuild production to three million barrels daily, that would lower global oil prices somewhat. More people buying electric vehicles had already cut oil demand by about one million barrels daily by 2025, according to industry estimates. That transition continues. Even if companies rebuilt production, they might do it when fewer people need oil, potentially making oil investments unprofitable.

JP Morgan analysts noted that if U.S. companies rebuilt production and combined it with reserves in Guyana and domestic U.S. production, the United States would control about 30 percent of the world’s oil reserves. That would give the U.S. enormous power over global energy.

Gulf Coast refineries that have traditionally refined heavy crude—facilities operated by Valero, Marathon Petroleum, and Phillips 66—will have to change how they operate. They could switch to other types of crude oil, but switching would cost them money.

Current Impact and Long-Term Questions

Your gas prices aren’t jumping because of sanctions enforcement. The embargo has been in place for years, production is minimal, global markets are oversupplied, and domestic production in the United States is at record levels.

The reserves represent 17 percent of global proven oil. If companies in the United States invest the estimated $100 billion needed to rebuild infrastructure, and if political stability materializes, and if oil demand doesn’t drop faster than expected as more people buy electric vehicles, then oil from this country could become important to global energy supply again.

Rubio’s January 6 announcement positioned sanctions as a way to force specific changes: stop drug trafficking, expel Iranian influence, restore democracy. The Trump administration undertook the most assertive military action for regime change since Iraq 2003. Legal experts, including the New York City Bar Association, said it violated the Constitution and international laws against military force.

By presenting sanctions as the main policy, the administration tried to make it look like economic pressure rather than military action. But the administration used military forces to capture a foreign leader. The official explanation doesn’t match what actually happened.

For consumers in the United States, gas prices will depend on how much oil is available worldwide, how much the U.S. produces, Middle Eastern production, and the overall economy. Sanctions are a minor factor in gas prices right now.

Whether massive reserves eventually come online under company management from the United States, whether that happens before electric vehicles make oil investments unprofitable, whether the Trump administration’s combination of intervention and economic measures produces stable democratic governance or prolonged instability—that story will take years to resolve.

For oil to become important again, the country needs: political stability, real democracy, companies willing to invest billions, clear rules about seized assets, and countries working together to enforce sanctions.

The January 6 announcement was the start of a years-long effort to use sanctions to put pressure on the country while competing with other nations for influence in the Caribbean. The capture of Maduro raises serious questions about whether the U.S. has the legal right to do this. Sanctions follow laws that have been in place for twenty years. The tension between military action and slow economic measures will determine what happens next.

The embargo remains in place. Tankers continue operating through fake companies. China continues buying what oil flows. Gulf Coast refineries are dealing with not having the heavy crude they need. Drivers in the United States continue filling their tanks at prices determined by factors far larger than what happens with one country’s struggling oil sector.

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