Venezuela Signs Oil Privatization Law Under Trump Pressure

Twenty-seven days after Nicolas Maduro's abduction, Venezuela just reversed 50 years of oil nationalization in a single stroke.

Venezuela's interim President Delcy Rodriguez signed sweeping oil sector reforms on Thursday, handing private companies control over the country's most valuable resource. The legislation fulfills a key demand from Donald Trump, who had threatened Rodriguez with consequences "probably bigger than Maduro" if she didn't comply.

The Price of Pressure

Since US forces abducted former President Maduro and his wife Cilia Flores on January 3, the Trump administration has systematically pressured Venezuela to open its oil sector. The message was clear: cooperate, or face the consequences.

Rodriguez framed the signing ceremony in optimistic terms, telling state oil workers they were "talking about the future" and "the country we are going to give to our children." But that future now depends heavily on foreign corporations and US-controlled bank accounts.

The new law grants private firms sweeping powers over Venezuelan oil production and sales. Perhaps more significantly, it requires legal disputes to be resolved outside Venezuelan courts – a long-standing demand from foreign companies who view the country's judicial system as compromised by socialist party influence.

Carrot and Stick Diplomacy

Timing wasn't coincidental. As Rodriguez signed the legislation, the US Treasury Department simultaneously announced limited sanctions relief, allowing "established US entities" to engage in transactions necessary for Venezuelan oil operations.

This represents classic carrot-and-stick diplomacy. The US maintains the comprehensive sanctions imposed during Trump's first term in 2019, while dangling the prospect of further relief for continued cooperation.

But the real game-changer lies in the details. Trump administration officials have stated that the US will determine to whom and under what conditions Venezuelan oil is sold, with proceeds flowing into US-controlled bank accounts. This effectively transforms Venezuela's sovereign resource into a US-managed asset.

Sovereignty in the Balance

The reversal is historically significant. Venezuela nationalized its oil sector in the 1970s, and Hugo Chavez expanded government control in 2007 by expropriating foreign assets. Nearly five decades of state ownership ended with Rodriguez's signature.

Critics argue the US has violated Venezuelan sovereignty, pointing to the dozens of deaths during Maduro's abduction and the coercive nature of the demands. Trump and his allies dismiss such concerns, with some asserting that Venezuelan oil should "belong" to the US.

Yet practical challenges remain. Much of Maduro's government apparatus stays intact, and Venezuela continues experiencing political repression and economic instability. Foreign petroleum companies, despite the legal protections, may remain wary of significant investments.

The New Resource Diplomacy

The legislation caps government royalties at 30 percent – potentially lucrative for private companies but a significant revenue reduction for Venezuela. The country's state oil company PDVSA, once a symbol of resource nationalism, now operates under fundamentally altered terms.

For international oil markets, Venezuela's proven reserves – among the world's largest – could become more accessible. But the precedent raises uncomfortable questions about resource sovereignty in an era of renewed great power competition.