Aletho News

Venezuela slashes oil production as US embargo halts exports

Al Mayadeen | January 5, 2026

Venezuela’s state-run oil company, PDVSA, began cutting crude output on Sunday as storage facilities reached critical capacity, a direct consequence of the comprehensive US oil embargo that has reduced exports to nearly zero.

The move adds further strain on an interim government grappling with mounting economic and political pressure.

PDVSA is shutting down oilfields and well clusters after storage facilities near capacity, with stocks of extra-heavy crude piling up. The company is also facing a shortage of diluents, essential for blending Venezuela’s heavy oil for export.

These constraints have forced the company to reduce PDVSA crude output.

Sources confirmed to Reuters that output cuts were requested at joint ventures such as CNPC’s Petrolera Sinovensa, Chevron’s Petropiar and Petroboscan, and Petromonagas. The latter, once operated jointly with Russian state-run Roszarubezhneft, is now under sole PDVSA control.

Chevron Shipments Halted Despite License

Chevron, which holds a US license to operate in Venezuela, had been an exception to the wider export freeze. However, since Thursday, its shipments have also come to a halt. Although Chevron has not yet reduced production, storage capacity is nearing its limit at key facilities such as Petropiar and Petroboscan.

No Chevron-operated tankers have left Venezuelan waters since Thursday, and if delays persist, Chevron Venezuela operations may be forced to scale back output.

Chevron stated it continues to operate “in full compliance with all relevant laws and regulations,” without providing further comment.

Political and Economic fallout from US blockade

The political landscape in Caracas remains tense following the kidnapping of President Nicolas Maduro and his wife by US forces on Saturday.

Delcy Rodriguez, Venezuela’s oil minister, has since assumed the role of interim president.

President Donald Trump declared that an “oil embargo” was fully in effect as part of a broader transition overseen by the US. The US oil embargo on Venezuela has halted tanker movements, impacted international shipments, and left the country’s oil-dependent economy under extreme duress.

Although Rodriguez stated last month that Venezuela would continue producing and exporting oil despite US sanctions, the embargo’s tightening grip has forced PDVSA to slow operations and store crude on vessels.

Export collapse and floating storage build-up

In recent weeks, PDVSA has resorted to using floating storage, loading tankers with crude and fuel as onshore capacity maxes out.

Over 17 million barrels of oil are currently stored aboard ships awaiting departure, according to TankerTrackers.com. No tankers were docked at the Jose terminal on Sunday, halting both export and domestic supply activities.

The Venezuela oil storage crisis worsened as more than 45% of the country’s 48-million-barrel onshore storage capacity was filled, forcing excess fuel oil into open-air waste pools.

Meanwhile, Venezuela’s access to diluents has been constrained. In the second half of last year, the country increased imports of naphtha and light oil from Russia to blend its heavy crude. However, these shipments began facing obstacles in December due to the US-led blockade.

Venezuela’s crude output, which stood at approximately 1.1 million barrels per day (bpd) in November with exports reaching 950,000 bpd, dropped to around 500,000 bpd last month, according to preliminary data based on shipping movements.

Venezuela’s oil production slowdown could have a domino effect, disrupting refining and the domestic fuel supply chain. This poses a serious challenge to the interim government, which relies on oil revenues to maintain basic governance and internal stability.

January 4, 2026 - Posted by aletho | Economics, Militarism | United States, Venezuela