U.S. President Donald Trump has terminated an oil agreement with Venezuela, revoking a license previously granted to Chevron Corp ( CVX ) by former President Joe Biden.

What Happened: Trump took to his Truth Social to announce the cancellation of Chevron’s Venezuela operations on Wednesday. This was based on the lack of progress on electoral reforms and migrant returns by Venezuelan President Nicolas Maduro. Though Trump did not mention Chevron ( CVX ) in his post, the date mentioned, i.e, November 26, 2022, was when the oil giant was given the license to operate in Venezuela’s oil sector. However, Trump did not mention the details of “electoral conditions.”

Chevron ( CVX ) did not immediately respond to Benzinga’s request for comment.

The decision was met with disapproval from Delcy Rodriguez, Venezuelan Vice President, who deemed it a “damaging and inexplicable decision,” reported Reuters. Nevertheless, Marco Rubio, the U.S. Secretary of State defended the move, arguing it was designed to end all oil and gas licenses from the Biden-era that have “shamefully bankrolled the illegitimate Maduro regime.”

Chevron ( CVX ), which exports approximately 240,000 barrels of crude daily from its Venezuela operations, stated it has knowledge of Trump’s stance and was evaluating the implications of his decision. The termination of the license means that Chevron ( CVX ) will no longer be permitted to export Venezuelan crude.

Since his January return to office, Trump has consistently stated that the U.S. does not require Venezuelan oil and hinted at the potential revocation of Chevron’s operating license. Trump announced that the oil concession agreement will be terminated effective March 1, instead of being renewed.

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Why It Matters: Chevron ( CVX ) played a pivotal role in driving the growth of oil production and the economy in Venezuela. A Bloomberg report in January highlighted that Chevron ( CVX ) submitted tax returns totaling approximately $300 million to the Venezuelan government last year, sparking concerns about the extent to which President Nicolás Maduro is profiting from the U.S. oil giant’s production despite sanctions.

Meanwhile, David Goldwyn, head of the energy advisory group at the Atlantic Council, previously told Bloomberg, "Chevron's ( CVX ) activity in Venezuela is in both country's interests, as it's having an efficient player helping the Venezuela economy from falling back and preventing migrants from coming back." This is particularly notable as Trump has expressed discontent over the slow progress of the return of Venezuelan migrants back to their country.

Oil prices inched higher on Thursday following declines in the past two sessions, as supply concerns re-emerged after Trump revoked Chevron’s license to operate in Venezuela. At 07:31 GMT, Brent crude futures had risen by 2 cents to $72.55 per barrel, while U.S. West Texas Intermediate (WTI) crude futures increased by 6 cents to $68.68 per barrel.

This decision comes on the heels of Chevron’s recent announcement of a significant workforce reduction. Chevron ( CVX ) planned to cut its workforce by up to 20% as part of a broader cost-saving initiative. The company aimed to reduce costs by $2 billion to $3 billion by the end of 2026. The termination of the Venezuelan license could potentially impact these cost-saving measures.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.