As the Donald Trump U.S. administration has seized oil tankers one after another in a bid to block Venezuela's oil exports, Venezuela, which has insisted that "there is no disruption to oil exports," has begun halting oil production due to storage facilities reaching capacity.
On the 29th, Bloomberg, citing two people familiar with the matter, reported that Venezuela's state oil company PDVSA began sequentially shutting down wells in the Orinoco Belt the day before because of a lack of storage space and a surge in inventories.
The Orinoco Belt is Venezuela's largest oil field area, and PDVSA first halted operations at wells in the Junín block, which has the highest share of extra-heavy crude production in the region. It then plans to expand the shutdown to the Ayacucho and Carabobo blocks, which hold relatively lighter crude.
With this move, PDVSA aims to cut crude production in the Orinoco Belt by at least 25% per day to about 500,000 barrels. That amounts to about 15% of Venezuela's total daily crude output of 1.1 million barrels. PDVSA approved the production cut plan on the 23rd, according to a person familiar with the matter.
An anonymous source said, "Shutting in wells is considered a last resort because restarting them involves operational difficulties and massive expense." Because oil is Venezuela's key source of revenue, the economic blow to the Nicolás Maduro government is expected to be considerable.
The decision is seen as a result of the Trump administration's intensified pressure. Saying it would block illegal crude exports, the Trump administration on the 10th seized the tanker Skipper, which was heading to Venezuela to load Venezuelan crude. On the 20th, it seized the Centaurus, and on the 21st it pursued the Bella 1 to seize it.
Venezuela had maintained that it could continue exporting crude. On the 17th, PDVSA said, "Our resolve to defend energy sovereignty, fulfill commitments to lawful trade, and protect maritime operations is firm," adding, "Crude export operations are being maintained normally." But as crude storage facilities reached their limit, production was ultimately halted.
Bloomberg assessed, "The decision is a sign that President Maduro, who tried to maintain crude exports that are central to Venezuela's economy throughout the blockade period, has acknowledged a practical limit."
The Trump administration, which has been tightening Venezuela's financial lifeline, is ratcheting up the pressure further. In a radio interview released on the 28th, President Trump said, "We took out a big facility where the ships depart two days ago." He did not name a specific country, but major foreign media reported there is a high possibility the Trump administration struck a ground target inside Venezuela.