Trump stated he is seriously considering 'admitting Venezuela as the 51st U.S. state'—aiming at its $40 trillion in oil wealth. Is this feasible?

Summary of U.S. sanctions relief on Venezuela: ・On January 29, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued General License No. 46, authorizing transactions related to the exploration, export, re-export, and refining of Venezuelan-origin petroleum involving the Venezuelan government and Petróleos de Venezuela, S.A. (PDVSA) and its affiliated entities—and longstanding U.S. entities established prior to January 29, 2025. Such transactions must satisfy the following conditions: (1) contracts must explicitly stipulate that U.S. law governs and that disputes be resolved exclusively in U.S. courts; and (2) payments to sanctioned individuals must be deposited into the Foreign Government Deposit Fund established under Executive Order 14373 or into accounts designated by the U.S. Department of the Treasury. The license expressly prohibits: (1) payment terms inconsistent with commercial reasonableness, involving debt swaps or gold payments, or denominated in Venezuelan government-issued digital currencies (including the Petro); (2) any transaction with entities owned or controlled by, or jointly established with, Russia, Iran, North Korea, or Cuba; (3) any transaction with entities incorporated in Venezuela or the United States—or governed by their laws—that are owned or controlled by, or jointly established with, Chinese entities; and (4) any transaction involving vessels subject to sanctions. Additionally, persons exporting, re-exporting, selling, reselling, or supplying Venezuelan-origin petroleum to countries outside the United States under this license must submit detailed reports to the U.S. government for each transaction—including identities of all parties involved, volume and value of petroleum, final destination country, transaction date, and any taxes, fees, or other payments made to the Venezuelan government. ・On February 10, OFAC issued General License No. 48, authorizing U.S. persons or entities to provide goods, technology, software, or services necessary for upstream oil and gas exploration, development, and production in Venezuela—but limited to refurbishment or repair of equipment used in such upstream operations. On the same day, OFAC published official guidance (FAQ1237) clarifying that both General Licenses No. 46A and No. 48 authorize routine payments by U.S. persons or entities to the Venezuelan government and its agencies for local taxes, licensing fees, and regulatory charges—but royalties, fixed per-barrel production fees, or federal taxes must be deposited into the Foreign Government Deposit Fund or a Treasury-designated account. ・On February 13, OFAC issued General License No. 49, authorizing negotiations and execution of conditional contracts related to new investment in Venezuela’s oil and gas sector—including exploration, development, or production activities; expansion of existing operations in Venezuela; and establishment of new joint ventures or other entities in Venezuela. This license requires that actual performance of such contracts remain contingent upon separate future authorization by OFAC—and explicitly excludes Russian, Iranian, North Korean, Cuban, or Chinese individuals, or any entities owned or controlled by them—or jointly established with them—from coverage. ・On February 18, OFAC issued General License No. 50A, replacing the earlier General License No. 50, authorizing bp, Chevron, Eni, Murex-Pro, Repsol, and Shell to conduct all oil and gas operations with the Venezuelan government, PDVSA, and its affiliated entities. ・On March 13, OFAC updated three Venezuela-related licenses: General License No. 46B (petroleum trade), No. 48A (technical services), and No. 49A (investment negotiations). Key changes expanded authorized scope from oil and gas alone to the full energy sector—including petrochemicals and electricity. However, these licenses continue to apply primarily to pre-existing U.S. entities (U.S. legal persons established before January 29, 2025), and explicitly exclude Chinese, Russian, Iranian, North Korean, and Cuban entities—as well as U.S.-Venezuelan entities owned or controlled by them. ・On March 18, OFAC issued General License No. 52, authorizing pre-existing U.S. entities to engage with PDVSA and its controlled entities in previously prohibited petroleum trade and related investment activities. Newly authorized activities include: trade, transportation, and storage of Venezuelan petroleum products; provision of goods, services, and technologies required for exploration and development in the oil, natural gas, and petrochemical sectors; signing of new investment contracts in oil, natural gas, or petroleum product fields; establishment of related joint ventures or other entities; and necessary ancillary transactions—including commercial, legal, and technical due diligence. Nevertheless, several critical transactions remain prohibited: (1) bonds, debt instruments, or equity transactions involving PDVSA and its subsidiaries; (2) transfers of equity in PDV Holding, CITGO Holding, or CITGO Petroleum; and (3) transactions involving individuals or entities listed on the Specially Designated Nationals (SDN) List. The license explicitly states it does not authorize the sale of CITGO shares held by Crystallex International Corporation in connection with its arbitration case against Venezuela; any such sale remains subject to separate, specific U.S. government approval. Furthermore, this authorization continues to uphold prior restrictions prohibiting participation by U.S.-Venezuelan entities owned or controlled by Chinese, Russian, Iranian, North Korean, or Cuban entities. ・On April 1, OFAC announced the removal of Venezuelan Acting President Delcy Rodríguez from the Specially Designated Nationals (SDN) List. On September 25, 2018, OFAC had added Rodríguez to the SDN List under Executive Order 13692, citing her role in helping Nicolás Maduro sustain authoritarian rule, undermining democratic processes, and involvement in corruption and humanitarian abuses—thereby freezing all her U.S.-based assets, prohibiting U.S. persons or entities from transacting with her, and imposing a travel ban. ・On April 14, OFAC issued two new Venezuela-related general licenses: No. 56 permits conditional or commercially viable contract negotiations with the Venezuelan government; and No. 57 authorizes financial services transactions with the Central Bank of Venezuela, Banco de Venezuela, Banco Obrero Digital, and the National Treasury Bank—and their controlled entities. OFAC also removed former Venezuelan Attorney General Reinaldo Muñoz Pedroza from the SDN List, noting he had resigned from his post and no longer holds a key government position.

Venezuela, Brazil, Guyana, and Argentina: an emerging new petroleum export bloc

Even if all hostilities were to cease today, Middle Eastern natural gas and oil output would still require months to fully recover from the U.S.-Israel-Iran conflict. For certain critical projects—such as Qatar’s North Field gas field, a vital node in the global liquefied natural gas (LNG) supply chain—recovery could take years. According to recent remarks by Philip Mshelbila, Secretary-General of the Gas Exporting Countries Forum (GECF), the Iran war—following Russia’s invasion of Ukraine—has “triggered sharp price spikes, returning markets to the volatility seen in 2022.” He noted that this has reshaped supply-demand dynamics: pre-war forecasts anticipated a global gas market surplus by 2026, but it remains unclear whether the U.S.-Israel-Iran conflict will merely delay that surplus—or prevent it altogether. Industry analysts further estimate that, given damage to oilfields and pipelines across multiple countries, shipping disruptions, and workforce losses due to site closures and evacuations, Middle Eastern oil producers may need six months to one year to fully restore output after hostilities end. Of course, in the zero-sum game of global energy, every loser creates a winner—and the United States has positioned itself as the principal beneficiary in the oil and LNG sectors, stepping in to fill global supply gaps. Washington is also leveraging this opportunity to bolster loyalty among petroleum and natural gas producers in South America—countries it considers part of its own sphere of influence. At the top of that list stands Venezuela. This is unsurprising: on January 3, Washington seamlessly replaced long-serving President Nicolás Maduro with Acting President Delcy Rodríguez—who also serves as Minister of Petroleum and Venezuela’s representative to OPEC. Since then, the country has taken steps to advance a rapid, U.S.-led revival—transforming this nation, which holds the world’s largest proven oil reserves yet extracts only a fraction of them, into a global oil and gas powerhouse and a key geopolitical and energy asset for Washington. Although state control intensified under former Presidents Hugo Chávez and Maduro—with adverse consequences—the country still possesses approximately 303 billion barrels of crude oil, roughly 17% of the global total. Most Venezuelan oil is ultra-heavy crude from the Orinoco Belt—more technically demanding and knowledge-intensive to process than light crude, yet cheaper to extract and often more profitable to refine. The real challenges lie not in extraction, but in transportation, upgrading, and refining—constrained by collapsed infrastructure, chronic diluent shortages, damaged upgrading equipment, sanctions, and the hollowing-out of PDVSA. If these bottlenecks are resolved, Venezuela could quickly restore output to its 2008 level of roughly 3 million barrels per day. Currently, U.S. energy supermajor Chevron has solidified its position in Venezuela’s oil sector through an asset swap, increasing its stake in the joint venture Petroindependencia to 49%. This entity operates the Carabobo 3 project in the Orinoco Heavy Oil Belt.

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