WASHINGTON (AP) — U.S. companies will be allowed to do business with Venezuela's state-owned oil and gas company after the Treasury Department eased sanctions, with some limitations, on Wednesday as the Trump administration looks for ways to boost world oil supplies during the Iran war.

The Treasury issued a broad authorization allowing Petróleos de Venezuela S.A, or PDVSA, to directly sell Venezuelan oil to U.S. companies and on global markets, a massive shift after Washington for years had largely blocked dealings with Venezuela’s government and its oil sector.

Separately, the White House said Trump would waive, for 60 days, Jones Act requirements for goods shipped between U.S. ports to be moved on U.S.-flagged vessels. The 1920s law, designed to protect the American shipbuilding sector, is often blamed for making gas more expensive.

The moves highlight the increased pressure that the Republican administration is under to ease soaring oil prices as the United States, along with Israel, wages a war with Iran without a foreseeable end date. Global oil prices have since spiked as Iran halted traffic through the narrow Strait of Hormuz, where one-fifth of the world’s oil typically passes through from the Persian Gulf to customers worldwide.

Drivers in the United States are paying the highest pump prices in about 2 1/2 years. The national average for a gallon of regular gasoline topped $3.84 on Wednesday according to AAA, compared with $2.98 before the U.S. and Israel launched strikes against Iran on Feb. 28.

Even before that, voters were worried about higher living costs, and fuel prices are now adding to concerns for Republicans heading into the election season with their control of Congress at stake in November.

“Gas prices are up and we know they’re up. And we know that people are hurting because of it. And we’re doing everything that we can to to ensure that they stay lower,” Vice President JD Vance said at an event in Auburn Hills, Michigan. “This is a temporary blip.”

The Treasury's license is designed to incentivize new investment in Venezuela’s energy sector and is intended to benefit both the U.S and Venezuela, while increasing the global oil supply, a Treasury official told The Associated Press. The official was not authorized to discuss the matter publicly and spoke one condition of anonymity.

Since the ouster and arrest of Nicolás Maduro as Venezuela's president during a U.S. military operation in January, President Donald Trump has said the U.S. would effectively “run” Venezuela and sell its oil.

The U.S. license provides targeted relief from sanctions, but does not lift the penalties altogether. The license allows companies that existed before Jan. 29, 2025, to buy Venezuelan oil and engage in transactions that would normally be banned under American sanctions, reopening trade for a major oil producer to global markets.

There is not likely to be much impact on U.S. gas prices in the short term, said Geoff Ramsey, an expert on Latin America at the Atlantic Council think tank.

“We’re talking about 12 to 18 months before we see dramatic changes in Venezuelan output," Ramsey said in an interview.

Easing sanctions could spur US investment in Venezuela

The license is expected to give a massive boost to Venezuela's oil-dependent economy and help encourage companies that have been apprehensive to invest. The decision is part of the Trump administration’s phased-in plan to turn around Venezuela.

There are some limits. Payments cannot go directly to sanctioned Venezuelan entities such as PDVSA, but must be sent instead to a special U.S.-controlled account. In other words, the U.S. will allow the oil trade but will control the cash flow.

Additionally, deals involving Russia, Iran, North Korea, Cuba and some Chinese entities will not be allowed. Transactions involving Venezuelan debt or bonds will not be allowed.

Critics of the acting Venezuelan government argue that the move rewards Venezuela’s leadership -– all loyal to Maduro and the ruling party -– while repression, corruption and human rights abuses continue.

Many public sector workers survive on roughly $160 per month, while the average private sector employee earned about $237 last year, when the annual inflation rate soared to 475%, according to Venezuela’s central bank, and sent the cost of food beyond what many can afford.

Venezuela sits atop the world’s largest oil reserves and used them to power what was once Latin America’s strongest economy. But corruption, mismanagement and U.S. economic sanctions saw production steadily decline from the 3.5 million barrels per day pumped in 1999, when Maduro’s mentor, Hugo Chávez, took power, to less than 400,000 barrels per day in 2020.

A year earlier, the Treasury Department under the first Trump administration locked Venezuela out of world oil markets when it sanctioned PDVSA as part of a policy punishing Maduro’s government for corrupt, anti-democratic and criminal activities. That forced the government to sell its remaining oil output at a discount — about 40% below market prices — to buyers such as China and in other Asian markets. Venezuela even started accepting payments in Russian rubles, bartered goods or cryptocurrency.

The new license does not allow payments in gold or cryptocurrency, including the petro, which was a crypto token issued by the Venezuelan government in 2018.

Jones Act waiver

White House press secretary Karoline Leavitt said the Jones Act waiver would help “mitigate the short-term disruptions to the oil market” during the Iran war and would “allow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports.”

Ramanan Krishnamoorti, vice president for energy and innovation at the University of Houston, said that step is expected to slow the rising cost of gas prices in specific parts of the country such as the mid-Atlantic.

“Places like Texas and Chicago are unlikely to feel any change in the price of gasoline and diesel because of because of the Jones Act waiver,” Krishnamoorti said. He said the most significant affect will be on American shippers now facing more competition from the relaxation of shipping rules, which could mean higher costs for them.

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Garcia Cano reported from Caracas, Venezuela. Associated Press writers Seung Min Kim and Michelle L. Price contributed to this report.

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