The US Treasury Department announced this Wednesday that it will authorize companies to apply for licenses to resell Venezuelan oil to Cuba, according to guidance published on the department’s website, a move that could help alleviate the island’s severe fuel shortages.
Since Washington took control of Venezuela’s oil exports in early January following the capture of President Nicolás Maduro, supplies from the South American country to Cuba have ceased, worsening its energy crisis.
Venezuela was for more than 25 years the main supplier of crude oil and fuel to its political ally Cuba through a bilateral pact. Mexico, which had emerged as an alternative supplier, has also halted shipments to Cuba since a fuel shipment arrived in Havana in January, according to shipping data.
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The new favorable licensing policy comes at a time when large trading companies, including Vitol and Trafigura, control the majority of Venezuela’s oil exports, with millions of barrels exported to the US, Europe and India, and millions more barrels stored in Caribbean terminals for resale.
US President Donald Trump warned that Venezuela’s allies who were receiving its oil as part of swaps, debt payments and other agreements must now pay fair market prices for the cargoes. These allies include China and Cuba.
The authorization comes as US Secretary of State Marco Rubio arrived in the Caribbean this Wednesday to begin talks with leaders who warned that Cuba’s growing humanitarian crisis could destabilize the region.
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Even with the new policy, it is not clear whether Cuba will be able to afford oil purchases without favorable conditions. With Cuba struggling to pay for fuel imports on the spot market in recent years, any potential purchases from traders are expected to require regular commercial conditions such as bank guarantees and cash payments.
Treasury guidance also makes clear that potential transactions must “support the Cuban people, including the private sector,” including exports for commercial and humanitarian use in Cuba, while transactions involving or benefiting the Cuban Armed Forces or other government institutions would not be covered.
The Treasury Department said applicants do not necessarily need to have an entity established in the U.S., and limitations in a license granted in January to widely export Venezuelan oil would not apply to Cuba.
