Venezuela’s state-owned oil giant PDVSA has begun scaling back crude oil production as storage facilities rapidly fill up, a direct consequence of a sweeping US oil blockade that has effectively halted exports. The production cuts add further strain on the country’s fragile interim administration, which is already grappling with political instability and warnings from Washington of possible additional military action.
The situation in Caracas has deteriorated sharply since President Nicolas Maduro and his wife were captured by US forces on Saturday, plunging the country into a deep political crisis. Oil exports, which form the backbone of Venezuela’s economy and provide its primary source of foreign revenue, have come to a complete standstill. This follows a US-enforced blockade on sanctioned tankers and the seizure of two Venezuelan oil cargoes in recent weeks, leaving the country unable to move crude to international markets.
Until recently, shipments operated by Chevron to the United States had continued, as the company holds a special licence from Washington allowing limited operations in Venezuela. However, shipping data indicated that even these cargoes stopped moving after Thursday, eliminating the last remaining outlet for Venezuelan crude exports.
When announcing Maduro’s detention and outlining a US-supervised transition process, President Donald Trump declared that a full “oil embargo” on Venezuela was now in effect. This announcement formalised the pressure that had already been building on PDVSA’s operations and export channels.
As storage tanks fill and supplies of diluents run low, PDVSA has started shutting down oilfields and clusters of wells, particularly those producing extra-heavy crude that must be blended before it can be transported. According to sources familiar with the matter, the company has formally requested production cuts across several joint ventures, including projects involving China National Petroleum Corporation, Chevron, and other international partners. Some operations previously run with Russian participation are now being managed solely by PDVSA.
At the Petrolera Sinovensa project, workers were preparing to disconnect up to ten well clusters after excessive accumulation of extra-heavy crude and shortages of diluents made continued production unsustainable. While these wells could be brought back online relatively quickly if conditions improve, the immediate focus is on preventing further storage overflow. Meanwhile, oil that would normally be shipped to China as part of debt repayment arrangements has also been disrupted, with China-bound supertankers halting their approach to Venezuelan ports late last year.
Similar reductions are under way at other facilities, such as Petromonagas, where output has been cut back until diluent supplies can be restored through pipelines. Chevron has so far managed to avoid immediate production cuts, relying on remaining storage capacity at some of its projects. However, although tankers are still being loaded, none have departed Venezuelan waters since Thursday, and storage space at certain sites is limited, raising the possibility of further curtailments.
Despite the fact that PDVSA’s infrastructure was not directly hit during the US military strikes over the weekend, the company is struggling to keep its systems running under mounting pressure. In addition to the shipping blockade and forced price discounts, PDVSA has yet to fully recover from a cyberattack that disrupted its operations in December, further complicating logistics and coordination.
The reduction in crude output risks triggering a chain reaction across Venezuela’s energy sector, potentially affecting refining activity and domestic fuel supply. This poses a serious challenge for the interim government, which urgently needs oil revenue to maintain basic stability and retain political control. Only last month, Venezuela’s oil minister and interim president Delcy Rodriguez had insisted that the country would continue producing and exporting oil despite US sanctions.
However, the blockade has forced PDVSA to rely heavily on floating storage since late December, slowing operations at its main export terminal in Jose. With tankers unable to leave port, industry experts and company officials say deeper production cuts may be unavoidable. After filling nearly half of its 48-million-barrel onshore storage capacity and diverting fuel oil to open-air waste pools, PDVSA began loading crude and fuel onto ships for temporary storage. More than 17 million barrels are now sitting in vessels offshore, waiting for clearance to depart.
On Sunday, no tankers were docked at the Jose terminal to load oil for either export or domestic use, underscoring the severity of the standstill. Compounding the crisis, PDVSA has faced difficulties importing essential diluents such as naphtha and light oil, particularly from Russia, due to the tightening US blockade.
Before these measures took effect, Venezuela was producing roughly 1.1 million barrels of oil per day in November and exporting about 950,000 barrels daily. US actions reduced shipments to approximately 500,000 barrels per day in December, and exports have now effectively dropped to zero, pushing the country’s oil industry into one of the most severe operational crises in its history.
