OFAC Eases Licensing Policy on Venezuelan-Origin Oil Bound for Cuba

The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) on February 25, 2026, issued new guidance in FAQ 1238, stating that it will apply a "favorable licensing policy" to specific license applications seeking authorization to resell Venezuelan‑origin oil for use in Cuba.

FAQ 1238 does not create a new general license or other blanket authorization. Instead, it signals that OFAC will review – and may be more receptive to – specific license applications where the proposed transactions align with the framework provided by earlier authorizations, specifically General License 46A (as discussed below), and are structured to support the Cuban people while avoiding prohibited Cuban government and military end users.

Favorable Licensing Policy

FAQ 1238 provides that, consistent with U.S. support for and in solidarity with the Cuban people, OFAC would implement a "favorable licensing policy" toward "specific license applications seeking authorization for the resale of Venezuelan-origin oil¹ for use in Cuba." This policy is focused on transactions that support the Cuban people, including the Cuban private sector, and extends to exports for commercial and humanitarian use. Transactions involving or for the benefit of Cuban military, intelligence or other government institutions, including entities on the U.S. Department of State's Cuba Restricted List, will not benefit from the same favorable licensing policy.

Limitations and Conditions

OFAC indicated that the requested transactions would need to be consistent with most terms and conditions of Venezuela General License 46A, including:

• Any contract with the Government of Venezuela (GoV) or Petróleos de Venezuela, S.A. (PdVSA) must be governed by U.S. law, with disputes resolved in U.S. courts, venues and/or forums.
• Payments to any blocked person (excluding payments for local taxes, permits or fees) for the sale and export of Venezuelan-origin oil must be made into the Foreign Government Deposit Fund (as specified in Executive Order (EO) 14373) or any other account as instructed by the Treasury Department.
• Payment terms that are not commercially reasonable, involve debt swaps or payments in gold, or are denominated in digital currency, digital currency, digital coin or digital tokens issued by, for or on behalf of the GoV, including the petro, will not be authorized.
• Any transaction involving persons or entities organized or located in Russia, Iran, North Korea or entities owned or controlled, directly or indirectly, by such persons, or companies owned or controlled by or in a joint venture with Chinese companies, will not be authorized.
• The unblocking of any property currently blocked pursuant to the Venezuela Sanctions Regulations (VSR), and any transaction involving a blocked vessel, will not be authorized.

Two of General License 46A's key restrictions will not apply under the favorable licensing policy toward Cuba:

• Applicants need not necessarily have an "established U.S. entity" (e.g., a company organized under U.S. law prior to January 29, 2025).
• General License 46A's exclusion of any Cuban person, or any entity owned or controlled by or in a joint venture with Cuban persons, would not apply.

Importantly, FAQ 1238 does not create a new OFAC general license or other blanket authorization that would permit the public to engage in the foregoing transactions. Any permission to engage in the foregoing activities would come only from a specific license granted by OFAC.

FAQ 1238 is expressly anchored to General License 46A, which was issued on February 10, 2026, to authorize certain activities involving Venezuelan-origin oil. General License 46A replaced and superseded Venezuela General License 46, issued on January 29, 2026, by allowing certain payments for local taxes, permits or fees to be made to blocked persons such as the GoV or PdVSA instead of into the Foreign Government Deposit Funds specified in EO 14373 of January 9, 2026. For more information and analysis, see Holland & Knight's previous alert, "OFAC Authorizes Certain Venezuelan Oil Sector Activities Following Venezuelan Reform," February 4, 2026. 

Reporting Requirements

OFAC specific licenses may impose certain reporting requirements, which may be modeled on General License 46A's required reporting to the U.S. Departments of State and Energy. Under General License 46, any person who exports, re-exports, sells or supplies Venezuelan-origin oil to countries other than the U.S. must provide a detailed report to the State and Energy Departments, including 1) the parties involved, 2) quantities, values and countries of ultimate destination, 3) dates the transactions occurred, and 4) any taxes, fees or other payments provided to the GoV.

U.S. persons seeking to rely on OFAC authorizations should also consider the agency's reporting and recordkeeping requirements. Under OFAC regulations, companies must keep full and accurate records of each transaction effected pursuant to an OFAC license for at least 10 years after the date of the transaction.

U.S.-Origin Exports to Cuba

FAQ 1238 also clarifies that exports and re-exports of U.S.-origin oil (and other U.S.-origin petroleum products) to Cuba are primarily regulated by the U.S. Department of Commerce under the Export Administration Regulations (EAR). Under the EAR, exports and re-exports of gas and other petroleum products to Cuba generally require an export license, but certain transactions may proceed under License Exception Support for the Cuban People (SCP), provided all conditions under the License Exception SCP are met.

Consistent with FAQ 1238, on February 24, 2026, the Commerce Department's Bureau of Industry and Security (BIS) issued updated guidance regarding the exports and re-exports of U.S.-origin oil (and other U.S.-origin petroleum products) to the Cuban private sector. This OFAC/BIS framework confirms that to comply with the SCP conditions, 1) the end user and primarily beneficiary of the products must be the Cuban private sector or the Cuban people, and 2) the products must be used by individuals for their personal or families' use or by the private sector in its economic activities (not excluding the possibility of resale among private-sector entities and individuals). The new guidance does not expressly prohibit that export transactions involve entities that are not "private sector" (e.g., Cuban import companies), provided the products are ultimately destined for the private sector or the Cuban people, which is consistent with the structure that BIS has historically accepted for Cuba exports under the SCP License Exception. The items exported cannot primarily generate revenue for or contribute to the operation of the state, including through the construction or renovation of state-owned buildings. U.S. exporters are responsible for ensuring compliance with these conditions.

Where the underlying export or re-export is authorized under the EAR, OFAC's Cuban Assets Control Regulations (CACR) generally authorize U.S. persons to engage in transactions ordinarily incident to exporting oil from the U.S. to Cuba or re-exporting U.S.-origin oil from a third country to Cuba. As a result, where U.S.-origin oil exports (or other covered petroleum products) are authorized by the Commerce Department (including under SCP), separate OFAC authorization may not be required for the OFAC component of transactions ordinarily incident to those exports or re-exports.² Further, BIS advised exporters and re-exporters of gas and petroleum products that if the export transaction meets the terms and conditions of License Exception SCP, any related export license application will be returned without action by BIS with a direction to the applicant to export or re-export the items pursuant to License Exception SCP, which means that BIS will no longer issue specific licenses or further authorizations for these exports. This "no-specific license" approach announced by BIS presumably applies to any other products exported to Cuba under the SCP License Exception.

This EAR/CACR framework does not, however, address sanctions issues for non-U.S.-origin oil (including Venezuelan-origin oil) destined for Cuba, particularly where Venezuela-related sanctions are implicated (including dealings with the GoV, PdVSA or PdVSA entities), and Cuba-related limitations would otherwise apply absent specific authorization.

Against that backdrop, FAQ 1238 is significant because it signals a favorable OFAC licensing policy toward specific license applications to authorize resales of Venezuelan-origin oil for use in Cuba. In practical terms, parties seeking to facilitate Venezuelan-origin oil flows to Cuba should plan on submitting an OFAC specific license application and should not assume the transactions can be structured solely through BIS authorization or CACR general licenses.

Practical Takeaways

As discussed above, FAQ 1238 does not create a new general license or other general authorization. Instead, it signals a clearer pathway for obtaining a specific license from OFAC for the resale of Venezuelan-origin oil for use in Cuba, where the applicant can demonstrate that the transactions support the Cuban people (including the Cuban private sector) and do not involve or benefit restricted Cuban institutions. In practice, that standard calls for targeted diligence on Cuban counterparties and end users, the intended end use of the oil, and whether any party is restricted (including under the Cuba Restricted List) or is acting for or on behalf of a restricted Cuban institution.

OFAC's statement in FAQ 1238 that applicants "need not necessarily have an established U.S. entity" appears intended to make this specific-licensing pathway workable for a broader set of market participants that may facilitate resales of Venezuelan-origin oil to Cuba. This does not eliminate OFAC's controls. Instead, it allows OFAC to impose conditions and additional safeguards through transaction-specific license terms tailored to the parties, structure and end use/end user risk profile.

Parties should also keep in mind that, to the extent a proposed transaction involves U.S.-origin items subject to the EAR, separate authorization from the Commerce Department may be required unless the transaction qualifies for a license exception such as SCP.

Tariffs

As a result of the recent U.S. Supreme Court decision in Learning Resources, Inc. v. Trump (consolidated with Trump v. V.O.S. Selections, Inc.), tariffs that the Trump Administration previously authorized with respect to countries that sell or provide oil to Cuba are no longer in place. On January 29, 2026, President Donald Trump issued EO 14380 to authorize tariffs under the International Emergency Economic Powers Act (IEEPA) on goods from countries that directly or indirectly sell or provide oil to Cuba. After the Supreme Court held that IEEPA does not authorize the imposition of tariffs, the Trump Administration on February 20, 2026, issued EO 14389 to revoke EO 14380 on tariffs, among others. (See Holland & Knight's previous alert, "Supreme Court Strikes Down IEEPA Tariffs: What Importers Need to Know Now," February 20, 2026.)

From a commercial perspective, the termination of the IEEPA-based additional duties may affect market competition. In particular, absent a reimposed tariff regime targeting third-country oil suppliers to Cuba, third-country sellers may encounter fewer trade-policy headwinds than U.S. exporters, who remain generally constrained under current U.S. export controls and sanctions authorizations to structures where the Cuban private sector or the Cuban people are the end user and primary beneficiary.

Looking Ahead

Though OFAC's favorable licensing policy may provide a clearer pathway for certain humanitarian and private-sector-oriented activities, its express exclusions, particularly those involving restricted Cuban institutions, make careful diligence and transaction transparency critical to a successful specific license application.

Parties should continue to monitor developments in Venezuela and Cuba and remain alert for new sanctions, authorizations, licensing policies, tariffs, guidance or other changes to the U.S. regime, which can emerge and shift rapidly.

Holland & Knight's U.S. Export Control and Sanctions Laws Team, Financial Services Regulations Team, International Trade Group, Venezuela Strategic Advisory Team and Cuba Strategic Advisory Team continue to monitor OFAC and Commerce Department developments affecting Venezuela- and Cuba-related transactions. For guidance on FAQ 1238, General License 46A, VSR, CACR or related licensing, please contact the authors.

Notes

¹ "Venezuelan-origin oil," as defined in Section 5(a) of EO 14245, "Imposing Tariffs on Countries Importing Venezuelan Oil," and as reflected in OFAC FAQ 1226, means crude oil or petroleum products extracted, refined or exported from Venezuela.

² See U.S. Department of Commerce, Bureau of Industry and Security, "Updated Guidance Regarding Available EAR License Exceptions for Exports of U.S. origin gas and petroleum products to Cuban Private Sector Entities and Activities."

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.