The Trump administration has issued an executive order restricting U.S. courts and foreign creditors from seizing Venezuelan oil funds held in American institutions, citing national security and regional stability concerns. The move targets assets tied to PDVSA, Venezuela’s state-owned oil company, and affects billions in potential claims.
- Executive order blocks U.S. courts and creditors from accessing Venezuelan oil funds in American banks
- Assets tied to PDVSA exceed $3.8 billion in frozen proceeds, primarily held at JPMorgan Chase, Citigroup, and Bank of America
- Annual oil revenue from Venezuela exceeds $12 billion, with proceeds used for domestic energy and humanitarian programs
- Order invokes national security and regional stability as justification for intervention
- Legal challenges from European and Latin American creditors may proceed in U.S. federal courts
- Administration cites International Emergency Economic Powers Act and Kingpin Act as legal basis
The Trump administration has taken sweeping steps to shield Venezuelan oil revenue from legal claims in U.S. courts, issuing an executive order that prohibits judicial enforcement against funds derived from Venezuela’s oil exports held in U.S. financial institutions. The directive specifically applies to assets managed through U.S. banks and custodians, including those linked to the state-owned Petróleos de Venezuela, S.A. (PDVSA), which has historically generated over $12 billion in annual oil revenue. The order asserts that allowing creditors or courts to access these funds would undermine U.S. efforts to stabilize Venezuela’s political and economic landscape, calling such actions a threat to national security. The executive order cites a 2023 U.S. Department of Treasury assessment that found more than $3.8 billion in Venezuelan oil proceeds remained frozen in U.S. accounts, subject to litigation from former bondholders and foreign governments. These funds were designated under the Foreign Narcotics Kingpin Designation Act, which allows the U.S. to restrict access to assets tied to illicit activities. However, the administration argues that uncontrolled legal seizures could destabilize Venezuela’s energy sector and worsen humanitarian conditions, potentially triggering regional instability. Financial institutions including JPMorgan Chase, Citigroup, and Bank of America have been notified of the new restrictions and are now barred from facilitating transfers or settlements involving the seized funds. Creditors, including private investment firms and sovereign funds from Europe and Latin America, have expressed concern, with one European consortium filing a preliminary injunction in the Southern District of New York over the order’s implications for contract enforcement. The move has sparked debate among legal scholars and policymakers, with some warning it could set a precedent for executive overreach in financial matters. Nevertheless, the administration maintains that the authority to protect sovereign assets used for stabilization efforts falls within its constitutional powers, particularly under the International Emergency Economic Powers Act.