Venezuela's state-controlled oil giant, PDVSA, has initiated significant cuts to its crude production. This drastic move comes after the company rapidly exhausted its onshore storage capacity. A sweeping oil blockade imposed by the United States has effectively paralysed the nation's exports, bringing shipments to a grinding halt.
Storage Crunch Triggers Production Shutdowns
According to industry sources, PDVSA has been forced to shut down oilfields and entire clusters of wells. This action is a direct result of onshore storage tanks reaching their limits. Compounding the crisis is a critical shortage of diluents. These chemicals are essential for blending Venezuela's extra-heavy crude into an exportable form.
The company has formally requested several key joint ventures to reduce their output. This includes operations involving American major Chevron and Petrolera Sinovensa, a subsidiary of China National Petroleum Corporation (CNPC). At the Sinovensa project, workers were preparing to disconnect up to 10 well clusters on Sunday following PDVSA's directive. Sources cited an "over-accumulation of extra heavy crude and a diluents shortage" but noted wells could be reconnected quickly if conditions improve.
Output reductions have also begun at the Petromonagas project. Employees are awaiting the resumption of diluent flows through pipelines. PDVSA now operates Petromangas alone after its former Russian partner withdrew from the venture.
Exports Paralyzed by US Tanker Blockade
Venezuela's oil exports, the lifeblood of its foreign revenue, have reached a standstill. The halt follows Washington's imposition of a tanker blockade under sanctions and the seizure of two Venezuelan cargoes last month. Even shipments operated by Chevron under a specific US licence have now ceased. Recent shipping data indicates that while tankers are still loading at some facilities, none have departed Venezuelan waters since last Thursday.
Chevron stated on Sunday that it continues to operate in full compliance with all relevant laws and regulations. The statement came as US President Donald Trump, announcing the detention of President Nicolas Maduro and a US-supervised political transition, declared that a full "oil embargo" on Venezuela was now in force.
Floating Storage and Deepening Political Crisis
With exports blocked, PDVSA has increasingly turned to using tankers as floating storage. After filling over 45% of its 48-million-barrel onshore capacity and diverting fuel oil to open-air pools, the company began loading crude onto vessels temporarily. Data from TankerTrackers.com shows more than 17 million barrels are now sitting in ships awaiting permission to depart.
No tankers were docked on Sunday at the country's main export hub, the Jose terminal. PDVSA's struggles extend to imports, having faced difficulties securing naphtha and light oil since December after US measures disrupted deliveries from Russia.
The production cuts intensify the economic strain on Venezuela during a volatile political transition under an interim government. Oil revenue is critical for basic economic stability and domestic fuel supply. Analysts warn that output curbs could trigger severe knock-on effects across refining and distribution networks.
Venezuela's oil minister and interim President, Delcy Rodríguez, asserted last month that the country would continue producing and exporting oil despite US pressure. However, executives and analysts caution that without the ability to move cargoes, further shutdowns are inevitable. Venezuela produced about 1.1 million barrels per day (bpd) in November, exporting roughly 950,000 bpd. Preliminary estimates based on vessel movements indicate shipments plummeted to around 500,000 bpd last month as sanctions tightened.
Global Oil Market Context
Venezuela's turmoil unfolds against a fragile global oil backdrop. On Sunday, the OPEC+ alliance kept its output policy unchanged after a brief meeting. The group sidestepped the political crises affecting several member states.
Oil prices have fallen more than 18% so far in 2025, marking the steepest annual decline since 2020 amid intensifying oversupply concerns. Eight participating OPEC+ members—Saudi Arabia, Russia, the UAE, Kazakhstan, Kuwait, Iraq, Algeria, and Oman—have already raised production targets by about 2.9 million bpd this year. This increase represents nearly 3% of global demand as part of an effort to reclaim market share.
