Re-entering Venezuela: A Risk-Reward Analysis for U.S. Oil Majors

The geopolitical and legal landscape surrounding U.S. oil investments in Venezuela has shifted dramatically in early 2026, following the U.S.-led capture of Nicolás Maduro and the subsequent announcement by the Trump administration to encourage American energy firms to rebuild the country's oil infrastructure. This development raises critical questions for U.S. oil majors: Is Venezuela's vast hydrocarbon potential worth the risks of political instability, sanctions compliance, and infrastructure decay?

Sanctions Regime and Geopolitical Shifts

The U.S. sanctions on Venezuela's oil sector remain in force, with the Treasury's Office of Foreign Assets Control (OFAC) maintaining restrictions on oil transport and sales to enforce national security objectives. However, the administration has selectively relaxed some measures to enable the marketing of Venezuelan crude to global markets, including authorizing the import of critical oil field equipment to support production recovery. These adjustments reflect a strategic pivot to counter China's growing influence in the region, as U.S. enforcement of sanctions has disrupted illicit oil flows and threatened Beijing's access to discounted Venezuelan crude.

The EU's 18th sanctions package, which includes a refined product ban and targeted measures against ship registries in Gabon and Comoros, further complicates trade routes. Meanwhile, the U.S. military action that removed Maduro has created a power vacuum, prompting a shift in Venezuela's oil exports toward authorized channels and increasing the likelihood of U.S. leverage over the country's energy sector.

Legal and Compliance Challenges

For U.S. oil companies, the legal framework for asset compensation remains ambiguous. While the Trump administration has signaled a willingness to facilitate investments in exchange for claims on assets seized by the Maduro regime, firms face uncertainty about reconciling these opportunities with existing arbitration awards from the 2007 expropriation of U.S. assets. The Department of Energy's plan to sell sanctioned Venezuelan oil at market prices, with proceeds held in U.S. banks until the country is deemed "ready" to receive them, underscores the administration's balancing act between sanctions relief and maintaining leverage.

OFAC's strict liability regime adds another layer of complexity. Violations of sanctions-such as facilitating transactions with sanctioned entities or operating in Venezuela's shadow oil trade-can result in severe civil or criminal penalties. For example, the Treasury has targeted oil traders and tankers involved in Venezuela's oil sector, emphasizing that firms enabling sanctioned activities risk reputational damage and financial exposure. Additionally, U.S. companies must navigate the Anti-Terrorism Act, which penalizes firms for materially supporting designated terrorist organizations, a concern given Venezuela's ties to transnational criminal networks like Tren de Aragua according to legal risk assessments.

Case Study: Chevron's Stance in Venezuela

Chevron stands out as the only major U.S. oil company still operating in Venezuela under a limited OFAC license. The company's joint ventures with Petróleos de Venezuela, S.A. (PDVSA) are prohibited from making cash payments to the Venezuelan government, effectively isolating financial benefits from sanctions enforcement. Despite this, Chevron continues to export approximately 140,000 barrels per day, leveraging its existing infrastructure to maintain a foothold in the country.

However, Chevron's strategy is not without risks. Revitalizing Venezuela's oil production to 4 million barrels per day would require an estimated $100 billion in investment over a decade, according to analysts. The company also faces unpaid claims from PDVSA and must navigate political instability, which could lead to further asset nationalization or operational disruptions. While Chevron's position as the sole U.S. operator in Venezuela positions it to scale up production quickly if conditions stabilize, the financial and reputational risks remain substantial.

Comparative Lessons from Iran and Russia

The U.S. experience with sanctions in Iran and Russia offers instructive parallels. In Iran, the Treasury has sanctioned 29 vessels and associated shipping firms involved in sanctions evasion, significantly increasing the cost of oil exports to China and other buyers. Similarly, Russian oil exports have been disrupted by price caps and secondary sanctions on financial institutions, though Moscow has adapted by deepening trade ties with China and India. These cases highlight the resilience of sanctioned regimes in finding alternative markets but also underscore the operational and compliance burdens for U.S. firms.

For example, Ferrari & Associates' successful defense of a multinational oil company in an OFAC investigation-resulting in a warning letter rather than penalties-demonstrates the importance of robust compliance programs. However, the financial outcomes for U.S. firms in these markets remain mixed, with high energy prices and trade diversification partially offsetting the impact of sanctions.

Risk-Reward Analysis

The potential rewards for U.S. oil majors in Venezuela are undeniable. With the world's largest oil reserves, the country offers a strategic opportunity to counter China's influence and secure long-term energy supplies. The Trump administration's offer of asset compensation for seized properties further sweetens the deal, though the legal path to recovery remains unclear.

Yet the risks are equally formidable. The $100 billion investment required to restore Venezuela's production capacity is a massive financial commitment, particularly given the country's infrastructure decay and political volatility. Security concerns, including high crime rates and U.S. travel advisories, add to the operational challenges. Moreover, the reputational risks of associating with a regime still under sanctions-despite Maduro's removal-could alienate investors and stakeholders.

Conclusion

For U.S. oil majors, the decision to re-enter Venezuela hinges on a delicate balance between geopolitical strategy and financial prudence. While the Trump administration's incentives and Venezuela's hydrocarbon potential present a compelling case, the legal, compliance, and operational risks cannot be ignored. Chevron's cautious approach-maintaining a limited presence while awaiting clearer signals from Washington-may serve as a model for others. Ultimately, success in Venezuela will depend on the durability of the sanctions regime, the stability of the post-Maduro transition, and the ability of U.S. firms to navigate a complex web of geopolitical and legal uncertainties.