Two months after the Trump administration revoked Western oil companies' licenses to operate in Venezuela, the results reveal a troubling pattern: Venezuela's authoritarian regime appears more entrenched than ever, while American adversaries have deepened their economic ties with Caracas.
The policy aimed to reduce Venezuela's oil production, pressure President Nicolas Maduro and his regime toward democratic transition, and limit oil revenues to U.S. adversaries like China, Iran, and Russia. Instead, it appears to be backfiring.
Venezuela has maintained oil production at approximately 900,000 barrels per day despite Western companies' exit, according to OPEC data. Executive Vice President Delcy Rodríguez's recent attendance at the OPEC International Seminar in Vienna—despite being on U.S. and EU sanctions lists—demonstrates the regime's diplomatic resilience.
As energy analyst Elias Ferrer noted, "the transfer will not happen straight away; it will take time," but Russian and Chinese firms are "certainly" positioned to co-opt existing infrastructure.
Rather than weakening Maduro's grip, sanctions have provided justification for increased authoritarian control. Human rights organizations documented well over 2,000 political prisoners detained by year's end and at least 24 people killed during post-election protests.
The Maduro regime systematically dismantled opposition infrastructure, with over 592 attacks on human rights defenders in just the first half of 2024—a 92% increase from the previous year. "The Venezuelan government has engaged in overt repression to stifle dissent and cling to power," said Juanita Goebertus of Human Rights Watch.
China, Iran, and Russia Deepen Ties
Most strategically damaging has been Venezuela's accelerated pivot toward American adversaries. China currently stands as Venezuela's largest crude customer, purchasing approximately 255,000 barrels per day, according to S&P Global data. This represents part of an estimated $226 billion in oil revenue losses that sanctions have redirected from Western markets to U.S. competitors.
The relationships extend beyond energy. China has announced interest in modernizing Venezuela's power system and signed AI cooperation agreements. Iran is building Venezuela's first fiber optic plant, while Russia established an ammunition factory.
This cooperation has created an "axis of evasion"—sanctioned countries sharing knowledge on circumventing Western restrictions while trading in Chinese currency. As one analyst noted, "About 3 billion people need to import energy. To them, sanctions just mean discounts."
Strategic Implications and Short-Comings
The Trump administration's strategy has fallen into the same trap as previous "maximum pressure" campaigns. Rather than weakening authoritarian regimes, broad-based sanctions have often strengthened them by providing justification for repression while forcing diversification away from Western markets.
A recent paper found that "sanctions often have the unintended effect of consolidating authoritarian rule. Governments under pressure from foreign sanctions frequently exploit the situation to strengthen internal control."
The result has been the creation of alternative economic networks that reduce these countries' dependence on Western systems.
Venezuelan oil continues to find buyers, with Chinese "teapot" refineries—small, privately owned facilities—absorbing approximately 90% of sanctioned oil exports. These purchases occur at discounted prices, with China paying about 8% below market rates for Iranian oil, while similar arrangements likely exist for Venezuelan crude.
Additionally, by forcing economic diversification, the Maduro government created opportunities for regime-connected elites to profit from previously restricted sectors, deepening loyalty while concentrating economic power.
Meanwhile, over 20 million Venezuelans live in poverty, and 8 million have fled since 2014. Surveys indicate 43% are considering leaving—a potential migration crisis that could impact U.S. border security.
A Look Forward
Recent analysis from Chatham House finds that "Venezuela is a case study in the failure of sanctions as a tool to bring about democratic change." Georgetown University research concludes that sanctions "can entrench authoritarian power rather than weaken it."
The Atlantic Council warned that "maximum pressure sanctions on Venezuela help US adversaries, hurt Venezuelans" and that "uncalibrated reapplication would cede influence toChina, Russia, and Iran, while doing little to loosen the regime's grip on power."
The challenge remains finding an approach that pressures the Maduro regime without strengthening America's strategic competitors or worsening the humanitarian crisis.
