The US and Venezuela: A Century-Long Relationship Steeped in Oil

A US State Department memorandum from the mid-20th century bluntly stated that the glue binding Washington and Caracas—and likely always will—is oil. The 1950 document read: “Every policy of the United States toward Venezuela is influenced to a greater or lesser extent by the objective of ensuring an adequate supply of oil for the United States.”

Decades later, little seems to have changed. Following the brazen capture of the country's leader earlier this year, President Donald Trump announced on August 28 that the US would take control of a large portion of roughly one-fifth of Venezuela's oil reserves. According to the White House, this deal “ensures our energy dominance for the next century.” How much the Venezuelan people will benefit from this agreement remains an open question.

Venezuela's importance to the US has been demonstrated repeatedly over the past century. Home to the world's largest known oil reserves today, Venezuela fueled the Allied planes, warships, and tanks during World War II.

Washington and Caracas largely cooperated in the following decades, with American energy companies deeply involved in Venezuela's oil industry, reaping massive profits. However, relations nosedived in 1999 when Hugo Chávez came to power.

A self-proclaimed socialist and anti-imperialist, Chávez forged alliances—often oil deals—with China, Iran, and Russia. Venezuela made a 180-degree turn to become a natural adversary of the US, alongside its ally Cuba.

Tensions escalated when Chávez was briefly detained by his own military after a deadly crackdown on major anti-government protests. The coup lasted only two days, and he soon returned to the presidential palace, accusing Washington of involvement in the failed putsch.

In subsequent years, Chávez increased Venezuela's reliance on oil exports. In 2007, he intensified his battle with Washington through a wave of nationalizations, seizing oil fields, including those operated by American companies. Caracas had nationalized the oil industry decades earlier but had allowed US firms to profit from extraction. Under Chávez's new terms, however, the state oil company held majority control, leaving foreign companies with minority stakes.

Among US oil companies, Chevron accepted the less favorable terms, but ExxonMobil and ConocoPhillips refused and were effectively pushed out of the industry. Only Chevron, the second-largest US oil company, continued operations in the country. ExxonMobil and ConocoPhillips engaged in years-long legal battles with Venezuela seeking compensation. The World Bank's International Centre for Settlement of Investment Disputes awarded them billions of dollars, but Venezuela never paid the full amounts.

Much of the country's oil infrastructure was built with foreign involvement, and international firms remain active in extraction, including Russian, Chinese, and Cuban companies, as well as British and European ones such as Shell, BP, Italy's Eni, and Spain's Repsol.

When Chávez died in 2013, Nicolás Maduro took power. The former bus driver had served as Chávez's foreign minister and continued the confrontational policy toward the US. Maduro's rule is widely considered authoritarian. In 2019, the United Nations estimated that more than 20,000 Venezuelans had died in extrajudicial killings. Key institutions like the judiciary eroded under Maduro, and the rule of law weakened.

The US regards Maduro's government as illegitimate. Washington-led sanctions, coupled with rampant corruption, have crippled Venezuela's economy. Relations further deteriorated as Maduro maintained close ties with Moscow and Beijing. About 80% of Venezuela's crude oil production was exported to China before the US imposed a blockade in December. China, the world's largest oil importer, received these shipments as repayment for previous loans to Caracas, often at discounted prices.

Since starting his second term, Donald Trump has repeatedly called for Maduro's ouster, accusing him of sending drugs and criminals to the US—a claim experts say lacks evidence. He has also accused Maduro of stealing US oil, referencing Chávez's asset seizures.

In July last year, Washington offered a $50 million (37 million pounds) reward for Maduro's capture, accusing him of being one of the world's top drug traffickers. The Trump administration conducted airstrikes on suspected drug smugglers in the Caribbean Sea and later seized Venezuelan oil tankers while increasing US military presence in the waters around the country.

In late November, Trump gave Maduro an ultimatum to step down, offering safe passage out of the country. But Maduro refused, telling supporters he did not want “a slave peace” and accusing the US of wanting to control his country's oil reserves.

In January, in a show of the complete breakdown in relations, US forces conducted a dawn raid in Caracas, capturing Maduro and his wife, Cilia Flores, who are now on trial in New York. Venezuela's current president, Delcy Rodríguez, initially condemned Maduro's capture as a kidnapping but later signaled her willingness to cooperate with Washington.

After Maduro's capture, Trump announced the US would take control of Venezuela's oil industry. In August, after months of secret negotiations, Washington's long-standing oil-centric policy was again evident as the US president unveiled a deal to control millions of barrels of oil. The White House press release described the agreement as “the largest oil deal in the history of the world,” granting the US government “strong governance rights” over oil reserves.

The White House statement also claimed that private sector growth would help foster democratic transition in Venezuela, but few in Caracas will hold out hope for that. Rodríguez has had to defend herself against accusations of surrendering Venezuela's natural resources to a foreign power. Renowned Venezuelan economist Francisco Rodríguez called the deal “robbery,” saying it was done “at gunpoint.” He wrote that Washington's actions in Venezuela had turned the country into “a de facto protectorate.” “Trying to run a country from the capital of an imperial power has been tried before,” he said. “And it didn't end well.”