U.S. President Donald Trump speaks at the Mexican Border Defense Medal Ceremony in the Oval Office of the White House on December 15, 2025 in Washington, DC, USA.
Evelyn HochsteinReuter
US President Donald Trump on Tuesday designated the Venezuelan government a “terrorist” organization and ordered a “complete and complete” blockade of sanctioned oil tankers traveling in and out of the country.
“Venezuela is completely surrounded by the largest armada in South American history,” President Trump said in a post on Truth Social.
“For theft of our nation’s assets, and for a number of other reasons, including terrorism, drug smuggling, and human trafficking, the Venezuelan regime has been designated a foreign terrorist organization. Therefore, today, I am ordering a complete and complete blockade of all licensed oil tankers entering and leaving Venezuela.”
He added: “(The lockdown) will be even bigger and the impact on them will be unlike anything we’ve seen before.”
Venezuela branded Trump’s comments “grotesque,” said Trump’s actions “violate international law, free trade and free navigation, and pose a serious threat to a sovereign nation,” and said the blockade was “totally irrational,” according to Google Translate of Venezuelan media reports.
According to the U.S. State Department, designating an organization as a “foreign terrorist organization” makes it illegal for U.S. citizens to knowingly provide “material support or resources” to such an organization.
Andy Lipow, president of Lipow Oil Associates, told CNBC that a total embargo on Venezuelan oil would affect 800,000 to 900,000 barrels of oil per day and could increase prices by about $2 to $3 per barrel.
The world will still remain “well-supplied,” Lipow said, as the world’s oil surplus is around 2 million barrels a day.
However, Lipow also noted that “the oil market will be watching China’s reaction because it is the largest buyer of Venezuelan oil, benefits from discounted prices, and is reluctant to comply with U.S. sanctions, which could keep Venezuelan oil flowing into the market.”
On the news, Brent crude rose 0.9% to $59.46 per barrel, while U.S. West Texas Intermediate crude rose 1% to $55.82 per barrel. Prices hit a four-year low in the US on Tuesday, with WTI falling nearly 3% to $55.27 per barrel and Brent dropping 2.71%, or $1.64, to settle at $58.92.
Bob McNally, president of Rapidan Energy Group, echoed Lipow’s view, saying “substantively nothing has changed” as long as sanctions only apply to tankers.
“We estimate that sanctioned tankers (only) threaten approximately 300,000 barrels of Venezuela’s approximately 900,000 barrels per day of crude oil exports.”
McNally said this is not enough to sustainably increase oil prices, which are starting to fall as surpluses emerge.
The Trump administration has ramped up pressure on Venezuelan President Nicolás Maduro in recent months, saying in an interview with Politico that his “life is numbered.” President Trump has not explicitly ruled out the possibility of a ground invasion of the South American nation.
The White House has reportedly embarked on a major military buildup that includes deploying the Caribbean’s largest aircraft carrier and attacking ships it says are trafficking drugs to the United States.
—CNBC’s Lee Ying Shan contributed to this report.
