Oil, Power and Pressure

The relationship between the United States and Venezuela has for over two decades been defined by economic coercion and political confrontation. What began as ideological divergence under Hugo Chávez has evolved into a sustained standoff centred on oil, sanctions, legitimacy and regional influence. At its core, the dispute is not merely bilateral but embedded within wider debates on sovereignty, global energy markets and the limits of economic statecraft.

Economically, Venezuela’s importance stems almost entirely from its vast oil reserves, the largest proven reserves in the world. For much of the twentieth century, Venezuela was a reliable energy partner of the United States, with oil exports forming the backbone of its economy. This relationship deteriorated sharply after Chávez’s rise in 1999, as Venezuela adopted a resource nationalist approach, increasing state control over the oil sector and redirecting revenues towards social programmes. While politically popular domestically at the time, this strategy left the economy dangerously dependent on oil, exposing it to both price volatility and external pressure.

The introduction of US sanctions marked a decisive turning point. Initially targeted at individuals, sanctions expanded significantly after 2017 to include restrictions on Venezuela’s oil exports, access to international financial markets and dealings with its state oil company, PDVSA. From a US perspective, these measures were framed as tools to pressure the Maduro government into democratic reform. Economically, however, the sanctions accelerated an already severe contraction. Oil production collapsed due to lack of investment, technological constraints and reduced access to global markets. Inflation soared, public finances disintegrated and living standards declined dramatically.

Politically, the United States justified its approach by questioning the legitimacy of Nicolás Maduro’s government, particularly following the contested 2018 elections. Washington’s recognition of opposition leader Juan Guaidó as interim president in 2019 was an unprecedented move, signalling a shift from diplomatic pressure to overt political intervention. This strategy aimed to isolate the Maduro regime internationally while encouraging internal regime change. Yet, despite initial momentum, the opposition failed to consolidate power, exposing the limits of external political leverage.

For Venezuela, the political consequences were twofold. Domestically, the government used sanctions as a rallying point, framing economic hardship as the result of foreign aggression rather than policy failure. Internationally, Venezuela pivoted away from the United States towards alternative partners such as China, Russia and Iran. These relationships, while providing limited economic relief, reinforced Venezuela’s position within a bloc of states resistant to US influence. This realignment underscores how sanctions can reshape geopolitical alliances rather than simply coerce compliance.

The US position has also been shaped by its own economic and political considerations. Energy security has long influenced US foreign policy, and Venezuela’s exclusion from Western oil markets coincided with increased domestic US production and diversification of energy sources. However, recent global energy disruptions have complicated this calculus. Rising oil prices and supply uncertainties have led Washington to partially ease certain sanctions, allowing limited Venezuelan oil exports under strict conditions. This pragmatic adjustment reflects the tension between political objectives and economic realities.

Politically, the standoff has had broader regional implications. US policy towards Venezuela has become a reference point for Latin American debates on sovereignty and intervention. While some governments aligned with Washington, others criticised the sanctions regime as counterproductive and harmful to civilians. This divergence weakened regional consensus and reduced the effectiveness of collective pressure, further entrenching the stalemate.

Ultimately, the US–Venezuela situation illustrates the complex interaction between economics and politics in international relations. Sanctions demonstrated their capacity to inflict severe economic damage but also highlighted their limitations as tools for political transformation. For Venezuela, economic collapse did not translate into regime change. For the United States, political isolation of Maduro fell short of restoring democratic governance.

As both sides cautiously recalibrate their strategies, the future of the relationship remains uncertain. Any meaningful resolution will require balancing political demands with economic incentives, recognising that prolonged confrontation has imposed high costs without delivering decisive outcomes. The US–Venezuela standoff thus stands as a case study in how economic pressure, when detached from viable political pathways, can entrench rather than resolve conflict.