The legal battle over Citgo Petroleum Corporation, the U.S.’s fifth-largest independent oil refiner, is often framed as a straightforward matter of creditor compensation and sanctions policy. But treating Citgo, a subsidiary of Petroleos de Venezuela (PDVSA) acquired in two stages in 1986 and 1989, solely as a commercial asset overlooks the broader strategic implications for the United States and the Western Hemisphere.
Last November, a federal judge in Delaware approved the sale of Citgo to Amber Energy, an affiliate of New York-based Elliott Investment Management, regarded as one of the world’s most feared hedge-fund activists. As part of the legal agreement, District Judge Leonard P. Stark accepted a $5.9 billion bid in a court-run auction designed to pay at least 15 external creditors of the Venezuelan state. Amber Energy’s offer includes an agreement to pay $2.1 billion to holders of the still-unpaid PDVSA 2020 bonds.
However, that approval did not constitute a closing, which is the prerogative of the Office of Foreign Assets Control (OFAC), an agency of the U.S. Treasury, as Venezuela’s state-owned companies, alter-ego entities, and officials have been the subject of more than 185 sanctions in recent years. Under pressure from the State Department, OFAC is withholding final approval for the company’s sale—it has been reported that some senior U.S. officials see the whole deal as grossly undervaluing the asset.
It’s not a surprise that until now, OFAC has renewed Citgo’s protection 22 consecutive times through General License 5 and its successive iterations (currently GL 5W), often for short periods of just a few months. The most recent extension, issued on May 4 and valid through June 19, has prevented the sale, transfer, or enforcement of the collateral (Citgo shares) absent specific OFAC authorization.
There are clear reasons for this. At a moment of rising geopolitical competition, energy insecurity, and democratic fragility across Latin America, the future of Citgo should not be viewed exclusively through the narrow confines of U.S. litigation or corporate restructuring. The company plays a far more consequential role at the intersection of U.S. energy resilience, Venezuela’s long-term recovery, and broader hemispheric stability.
That reality warrants a more strategic debate in Washington.
A consequential consideration
For years, U.S. policy toward Venezuela centered primarily on sanctions, diplomatic isolation, and efforts to pressure Nicolás Maduro’s government following democratic backsliding, corruption, and authoritarian consolidation. Those concerns remain legitimate today, after the capture of the former dictator, with an interim government led by acting President Delcy Rodríguez.
Venezuela’s political crisis continues to generate profound humanitarian, economic, and regional security consequences, including migration pressures, weakened governance, and the expansion of illicit networks throughout the hemisphere. But the geopolitical context surrounding Venezuela has also evolved significantly.
Competition with China, Russia, and Iran increasingly extends into Latin America through infrastructure financing, energy cooperation, technology investments, and political influence. Venezuela’s prolonged institutional and economic collapse created opportunities for external actors seeking greater strategic footholds in the region. In this environment, the U.S. cannot afford to view major hemispheric energy assets solely through a transactional lens.
Citgo represents more than a refining company tied to Venezuela’s state oil sector. Its refining and distribution network forms part of the U.S.’s broader energy infrastructure at a time when energy security has reemerged as a central geopolitical concern. Recent disruptions in global energy markets—from conflicts affecting maritime trade routes to broader supply chain instability—have underscored how quickly international crises can reverberate across domestic economies.
Surging refining margins due to the Iran conflict mean Citgo is expected to generate as much as $3.6 billion in EBITDA this year alone, and the company reported a total throughput of 851,000 barrels per day in the first quarter. The refiner reached $157 million in net income and $368 million in EBITDA in the first three months of the year.
This has cemented the refiner’s role in U.S. energy security, while sizably increasing its commercial value. Just last week, lawyers representing Venezuela in the case before the Delaware judge argued that the company’s value has substantially improved in recent months and called for a halt to the sale. “Such an outcome is plainly unfair—to Citgo, to the Venezuelan people, and to the out-of-the-money creditors,” one of the lawyers asserted, adding that Citgo should now be valued at $15.1 billion.
This is why the debate over Citgo should not be reduced to a question of whether creditors have valid claims. Many do. The more important policy question is whether the U.S. should allow one of the hemisphere’s most strategically significant energy assets to be passed through a distressed legal process without a broader national-security framework informing the outcome.
That distinction matters. A rushed or narrowly financial disposition of Citgo could weaken an asset that still carries strategic value for both U.S. energy resilience and any future effort to stabilize Venezuela economically. Once critical infrastructure is fragmented or redirected exclusively toward short-term financial objectives, restoring long-term strategic capacity becomes far more difficult.
A strategic view
Washington has increasingly recognized the importance of protecting critical infrastructure and strengthening supply-chain resilience in sectors tied to national competitiveness and economic security. Energy infrastructure should be viewed through the same lens. This explains the State Department’s efforts to prevent the Amber Energy deal and OFAC’s delay in approving it.
A more reasoned debate over Citgo’s sale does not mean shielding Venezuela’s government from accountability or dismissing creditors’ legitimate claims. Nor does it require abandoning pressure mechanisms aimed at promoting democratic outcomes. But it does require acknowledging that Venezuela policy cannot be divorced from broader hemispheric strategy.
For much of the 20th century, U.S. policymakers approached energy security in hemispheric terms. Stability among neighboring energy-producing states was considered integral to American economic resilience and geopolitical influence. In today’s more fragmented international environment, that logic is becoming relevant once again.
The Western Hemisphere is entering a period of renewed strategic competition. Migration, organized crime, energy insecurity, democratic erosion, and external authoritarian influence are increasingly interconnected challenges rather than isolated policy issues. Venezuela sits at the center of many of these dynamics.
The future of Citgo, therefore, is not simply about resolving a corporate dispute. It is about whether the U.S. is prepared to approach hemispheric energy infrastructure as part of a larger strategic framework, one that recognizes the growing links between economic security, geopolitical competition, and regional stability.
ABOUT THE AUTHOR
Brian Fonseca
Reading Time: 4 minutesFonseca is the Director of Florida International University’s Jack D. Gordon Institute for Public Policy and an International Security Fellow at the DC-based think tank New America. He writes from Miami.
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