US Policy Shift Allows Venezuelan Oil Sales to Cuba Amidst Economic Crisis

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has announced a shift in policy, permitting the sale of Venezuelan petroleum to Cuba under specific licensing conditions. This decision, framed as support for the Cuban people, allows transactions that benefit Cuba’s private sector, but prohibits sales to entities linked to the Cuban military, intelligence services, or other government institutions .

Background: Cuba’s Oil Supply Challenges

This policy change comes as Cuba faces a severe energy crisis, having lost its two primary oil suppliers – Mexico and Venezuela – in recent years. The U.S. Previously halted Venezuelan oil supplies to Cuba and threatened tariffs on any country continuing such shipments .

US Sanctions and Cuba’s Economic Situation

Cuba has long struggled with economic difficulties, exacerbated by years of American sanctions. However, the current crisis is described as unprecedented. The U.S. Government, under the Trump administration, aimed to pressure the Cuban government to change its policies through an oil embargo .

Venezuela’s Political Landscape and US Involvement

Recent events in Venezuela have as well influenced the situation. In January 2023, reports indicated the detention of Venezuelan President Nicolás Maduro and his wife, accused of narco-terrorism. Subsequently, the U.S. Supported Delcy Rodríguez, Maduro’s vice president, to lead the country, with the understanding that the government would cooperate with U.S. Interests regarding Venezuela’s oil sales and revenue .

Entities Subject to Restrictions

Direct financial transactions are generally prohibited with entities and subentities associated with Cuba, as outlined in the U.S. Department of State’s “Cuba Restricted List” and the Cuban Assets Control Regulations (31 CFR 515.209) . The list is updated periodically and details entities under the control of, or acting for or on behalf of, the Cuban government .

Recent Changes to Cuba Sanctions

Since 2022, the Biden administration has implemented changes to the United States’ sanctions regime relating to Cuba . OFAC provides guidance on various subjects related to the Cuba sanctions, including travel, publishing activities and the transfer of claims against Cuba .

Individuals seeking to authorize specific economic activity related to the Cuba Sanctions can apply for a specific OFAC license .