Venezuela’s state-run oil producer PDVSA has begun cutting crude production after rapidly running out of storage capacity, as a sweeping US oil blockade has effectively brought exports to a halt. The curbs add to mounting economic and political pressure on Caracas at a moment of acute instability, following the detention of President Nicolas Maduro by US forces and escalating threats of further American military action from Donald Trump.
Storage crunch forces production cuts in Venezuela
According to industry sources cited by Reuters, PDVSA has been compelled to shut oilfields and entire well clusters as onshore tanks fill and supplies of diluents—essential for blending Venezuela’s extra-heavy crude—run critically low.
The company has asked several joint ventures to reduce output, including operations involving Chevron and China National Petroleum Corporation’s CNPC subsidiary Petrolera Sinovensa.
Workers at Sinovensa were preparing on Sunday to disconnect up to 10 well clusters at PDVSA’s request due to an “over-accumulation of extra heavy crude and a diluents shortage,” Reuters quoted people familiar with the developments, while stressing that the wells could be reconnected relatively quickly if conditions improve.
At the Petromonagas project, employees have already started reducing output as they await the resumption of diluent flows through pipelines. PDVSA is also operating Petromangas alone after its former Russian partner withdrew.
Exports paralysed by US blockade
Venezuela’s oil exports—long the country’s principal source of foreign revenue—have ground to a standstill after Washington imposed a tanker blockade under sanctions and seized two Venezuelan cargoes last month. Even shipments operated by Chevron, which had continued under a specific US licence, have now ceased. Shipping data showed that although tankers are still loading at some facilities, none have departed Venezuelan waters since Thursday.
Chevron said on Sunday that it continues to operate “in full compliance with all relevant laws and regulations,” without elaborating, Reuters quoted.
As part of announcing Maduro’s detention and a US-supervised political transition, President Donald Trump said on Saturday that an “oil embargo” on Venezuela was now fully in force.
Floating storage fills as tanks overflow
With exports blocked, PDVSA has increasingly turned to floating storage, Reuters report stated. After filling more than 45% of its 48-million-barrel onshore capacity and diverting fuel oil to open-air waste pools, the company began loading crude and fuel onto tankers as temporary storage. More than 17 million barrels are now sitting in ships awaiting clearance to depart, according to TankerTrackers.com.
No tankers were docked on Sunday at the country’s main export hub, the Jose terminal, either for export or domestic supply. PDVSA has also struggled to secure imports of naphtha and light oil since December, as deliveries from Russia were disrupted by the US measures.
Venezuela’s political uncertainty deepens economic strain
The production cuts come as Venezuela navigates a volatile political transition under an interim government following Maduro’s capture. Oil revenues are widely seen as critical to maintaining basic economic stability and domestic fuel supply, raising concerns that the output curbs could trigger knock-on effects across refining and distribution.
Venezuela’s oil minister and now interim President, Delcy Rodríguez, now serving as interim president, said last month that the country would continue producing and exporting oil despite US pressure. However, executives and analysts warn that without the ability to move cargoes, further shutdowns are unavoidable.
Venezuela produced about 1.1 million barrels per day (bpd) of crude in November and exported roughly 950,000 bpd. Shipments fell to around 500,000 bpd last month as sanctions tightened, according to preliminary estimates based on vessel movements.
OPEC+ holds course amid global oversupply
The turmoil in Venezuela has unfolded against a fragile global oil backdrop. On Sunday, OPEC+ kept output policy unchanged after a brief meeting that sidestepped political crises affecting several member states.
Oil prices have fallen more than 18% so far in 2025, their steepest annual decline since 2020, as concerns over oversupply intensify. The 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, nearly 3% of global demand, in an effort to reclaim market share.