New U.S. Permit for Diluent Exports to Venezuela
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has granted a new permit for the export and sale of U.S. diluent to Venezuela. This diluent is a key component for producing crude oil suitable for export in OPEC nations.
This marks the second permit issued by the Trump administration since the U.S. took control of Venezuelan oil exports following a law enforcement operation in Caracas on January 3, which resulted in the arrest of the country’s socialist leader, Nicolás Maduro.
The recent license specifically authorizes the export of U.S. diluent to Venezuela, which is vital for their oil production, particularly due to the “super heavy” nature of Venezuelan crude.
According to the terms of the license, trading in U.S. diluent is allowed only if an agreement with the Venezuelan government, specifically with its state oil company PDVSA, includes a provision stating that U.S. law governs the agreement and that any disputes will be resolved in the United States.
The license also explicitly disallows any payment arrangements that are not deemed “commercially reasonable,” along with transactions involving debt swaps or payments made in gold, digital currencies, or tokens issued by the Venezuelan government, including its petro virtual currency, which was introduced by President Trump in 2018 but experienced significant failures. Additionally, any transactions tied to individuals or entities in Iran, North Korea, or Cuba are expressly prohibited.
This new license for U.S. diluent comes just days after the U.S. provided permits to American oil firms, allowing them to operate more extensively in Venezuela. This development occurred around the same time that Venezuelan lawmakers implemented major reforms to the country’s hydrocarbon laws, loosening some of the strict regulations on the oil sector. In January, President Trump mentioned that U.S. companies would start drilling for Venezuelan oil “immediately.”
Reports from Bloomberg and Reuters indicated that additional licenses allowing companies to extract Venezuelan crude are in the works as part of the Trump administration’s strategy to revitalize the Venezuelan oil sector, according to anonymous sources familiar with the situation.
Similar to the previous permit issued in January, the new authorization requires entities exporting or supplying U.S.-made diluent to Venezuela to file detailed reports with both the State Department and the Department of Energy concerning the transactions. Follow-up reports are expected every 90 days while the activities are ongoing.
