Trump Targets Oil Trade with 25% Tariff Threat
President Donald Trump has escalated his stance on immigration and energy, threatening a 25% tariff on oil and gas purchases from Venezuela. The tariff, set to take effect on April 2, targets global buyers of Venezuelan crude, aiming to sever financial support for Nicolás Maduro’s regime in Caracas.
This announcement sparked volatility in oil markets. US crude futures rose by 1.5% before settling at $69.02 per barrel, reflecting growing concerns about global oil supply disruptions.
Venezuela in Washington’s Crosshairs
Venezuela is already under heavy scrutiny from the US government. Chevron, a key US producer in the region, has been ordered to wind down operations. Despite this, the US Treasury has extended Chevron’s deadline to cease business with Petroleos de Venezuela SA to May 27.
Trump’s order, which he called “secondary tariffs,” follows the model of secondary sanctions and could have serious implications for oil trade globally. Buyers like China, Cuba, and India now face increased costs and legal hurdles if they continue importing Venezuelan oil.
Impact on Global Oil Buyers and US Refiners
The largest consumers of Venezuelan oil include US refiners such as Valero Energy Corp, Phillips 66, and PBF Energy. These companies rely on Venezuela’s heavy crude to balance refining operations. Although Trump didn’t explicitly target US imports, uncertainty looms over whether domestic companies will also face restrictions.
Global oil buyers may scramble to find alternative sources, especially as Mexican and Canadian oil exports to the US have already slowed. With Venezuelan oil flows at a five-year high in February, any disruption could boost global oil prices further.
Oil Prices React to Political Volatility
Global oil prices are already under pressure due to oversupply concerns and slowing US economic growth. Trump’s renewed Venezuela tariffs are adding another layer of risk, making investors cautious. Brent crude remains below recent highs, while geopolitical tensions continue to dominate sentiment in the oil market.
Analysts suggest Trump’s aggressive posture could push prices higher in the short term, especially if refiners struggle to replace lost Venezuelan oil. The global oil market remains highly sensitive to any perceived threat to supply chains.
Geopolitical Moves Intensify Energy Tensions
The Venezuelan move is part of a broader strategy targeting the South American nation’s government. Trump accused the Maduro regime of covertly sending criminals, including members of the Tren de Aragua gang, to the US. The administration has responded with aggressive deportation efforts, some under an obscure 18th-century law.
Trump’s remarks on “LIBERATION DAY IN AMERICA” framed the oil tariff as part of a larger effort to combat what he sees as threats to US national security. However, critics warn that politicizing oil trade could strain diplomatic relations and worsen volatility in energy markets.
Venezuela’s Oil Reserves and Global Influence
Despite producing less than 1% of global oil, Venezuela holds the world’s largest proven crude reserves—303 billion barrels, or 17% of global supply. This paradox underscores the country’s untapped energy potential.
However, due to sanctions and chronic underinvestment, Venezuela’s production has plummeted. In 2024, the nation produced just 875,000 barrels per day, according to OPEC. The latest US tariffs could stifle efforts to revive output and reshape oil dynamics across the Americas.
What Comes Next for Oil Markets?
With Trump’s tariffs poised to take effect on April 2, markets will watch closely for reactions from China, India, and other major oil importers. Any retaliatory actions or supply cuts could cause a new wave of volatility.
For now, the global oil market braces for impact. Prices may rise further if refiners struggle to fill the supply gap, and diplomatic rifts could widen as Trump pursues an aggressive trade and energy agenda.