The United States’ recent assertion of control over Venezuela’s oil export revenues has created significant legal, economic, and geopolitical complications—especially in relation to how Caracas repays its large debt to China, analysts say.
Under arrangements dating back to 2019, Venezuela was using crude oil shipments to China as a mechanism to service loans extended by Beijing, with cargoes facilitated under temporary agreements with the state oil company PDVSA and payments routed through China-controlled accounts. This arrangement helped Venezuela meet roughly 10% of its estimated $150 billion foreign debt tied to Chinese lenders and state banks.
However, recent U.S. actions—following heightened intervention in Venezuelan affairs and efforts to control the country’s energy exports—have redirected proceeds from Venezuelan oil sales into a Qatar-based account under U.S. control. Washington now holds discretion over how and when these funds are used, including any potential disbursements to creditors. (
Debt restructuring experts warn this shift complicates Venezuela’s already arduous path out of default, first declared in 2017. By exerting influence over oil revenue flows, the U.S. may inadvertently determine creditor payment priority, potentially sidelining Chinese claims and increasing the risk of a diplomatic and legal clash between Washington and Beijing over sovereign debt obligations.
China has already signaled strong objections, accusing the U.S. of overstepping and arguing that Beijing’s “legitimate rights and interests…must be protected” in any oil revenue discussions. Analysts suggest that if the U.S. does not coordinate with China on debt repayment, Beijing could take a harder stance in future negotiations, slowing down restructuring efforts and undermining Venezuela’s economic recovery.
The situation places the Trump administration in a difficult position: if it chooses to pay China on Venezuela’s behalf, it risks being seen as servicing another nation’s debt; if it refuses, it could fuel diplomatic tensions, giving China a propaganda advantage and possibly affecting cooperation on broader global financial and political issues.
The legal and financial landscape surrounding sovereign debt, creditor hierarchy, and revenue control is becoming increasingly complex. Experts caution that the interplay between U.S. sanctions, oil revenue control, and sovereign debt obligations will have long-term effects not only for Venezuela but also for international norms governing creditor rights and debt restructuring in emerging markets.
