Donald Trump has ended oil giant Chevron’s (CVX) permit to operate in Venezuela, a move that could shake the country’s fragile economy. The move follows Trump’s February 19 warning that Chevron’s access to Venezuela’s oil fields was under review. This decision reverses the policy under Joe Biden, which allowed Chevron to produce oil and maintain operations in the sanctions-hit country. Without U.S. support, industry experts warn that Venezuela could face a steep drop in oil production.
Why Did Trump Pull the Plug?
Trump’s team says Venezuela broke its promises. Officials claim that the country failed to hold fair elections and has been slow to take back deported immigrants. Announcing the move, Trump said, “We are hereby reversing the concessions that Crooked Joe Biden gave to Nicolas Maduro, of Venezuela, on the oil transaction agreement, dated November 26, 2022.”
The decision also comes after global concerns about Venezuela’s 2024 election. Critics claim the vote was rigged to keep President Nicolas Maduro in power.
Chevron Exit Could Hit Venezuela’s Oil Output
Trump’s move to end Chevron’s license could hit Venezuela’s oil production hard. Chevron is the only U.S. oil company still working in the country. The company pumps over 200,000 barrels a day, nearly a quarter of Venezuela’s total oil. According to Financial Times, industry experts warn that without Chevron, Venezuela’s oil output could drop below 500,000 barrels per day, a significant decrease from the 900,000 bpd reported last year.
Since oil exports make up a big part of Venezuela’s income, a drop in output could cut government funds, hurting its GDP and other public services.
Is CVX a Buy?
Overall, Wall Street has a Strong Buy consensus rating on CVX stock, based on 12 Buys and three Holds. The average CVX price target of $176.47 implies 13.75% upside from current levels, with the stock having risen 6% in the last 12 months.
