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Oil Soars On Venezuela Coup Attempt

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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Crisis Stricken Venezuela Faces Mounting Pressure From The U.S.

Over the past weeks, the Trump Administration has tightened the noose around Nicolas Maduro’s regime, increasing pressure on the country sitting on top of the world’s largest oil reserves. Venezuela is already reeling from a years-long economic disaster that has slashed its crude oil production in recent years. This year, the country found itself with two other major global crises to manage—the coronavirus pandemic and the tumbling and highly volatile oil market with oil prices so low that they can’t cover the costs of pumping Venezuela’s heavy crude out of the ground.

Maduro’s regime, which has managed to cling to power more than a year after the U.S. stepped up sanctions to ban Venezuelan oil exports to the United States, now has to cope not only with the three crises but also with additional pressure from the Trump Administration.  

Disaster for the ordinary people in Venezuela is only set to increase. Still, some analysts argue that further pressure on Maduro could only serve to unite the ranks of the regime, which controls the military and the arms during a global pandemic.

“This is government that holds itself up because it control all arms, and especially during a pandemic, having a monopoly on violence is indispensable,” Phil Gunson, a Caracas-based analyst at the International Crisis Group, told Bloomberg.

The U.S. is not backing down from the harsh sanctions on Venezuela, resisting calls from around the world, and from U.S. Democratic lawmakers for sanctions relief in times of pandemic.

The U.S. Administration says that sanctions do not apply to humanitarian aid and medicines and has stepped up pressure on Venezuela’s Maduro in recent weeks.

Two weeks ago, Maduro was charged in a Southern District of New York federal indictment for narco-terrorism, conspiracy to import cocaine, possession of machine guns and destructive devices, and conspiracy to possess machine guns and destructive devices. The U.S. Department of State is also offering a reward of up to US$15 million for information leading to the arrest and/or conviction of Maduro.

A week ago, the U.S. Department of State proposed a so-called ‘Democratic Transition Framework for Venezuela’, offering to ease sanctions in exchange for Maduro’s regime and supporters of opposition leader Juan Guaidó—recognized as Venezuela’s legitimate president by the U.S. and 50 other countries—forming a power-sharing government until fair elections are held.

“Economic pressure will continue until Maduro accepts a genuine democratic transition,” U.S. Secretary of State Mike Pompeo said upon announcing the proposal.

Related: Russia To Cut 1 Million Barrels Per Day, But Under One Condition

Venezuela’s Foreign Minister Jorge Arreaza rejected the U.S. proposal, saying that the government reiterates it does not accept and will not accept any tutelage from any foreign government.

The U.S. also pressured Venezuela’s oil exports over the past two months, slapping sanctions on two subsidiaries of Russia’s oil giant Rosneft for trading Venezuelan oil. Last week, Rosneft ditched all its oil operations and assets in Venezuela, transferring them to a wholly state-owned oil company named Roszarubezhneft.

The loss of trading partners due to additional U.S. sanctions, the colossal global demand destruction, and the coronavirus pandemic for which an economy in collapse such as Venezuela’s is unprepared, add to the endemic lack of funds to support the country’s oil production.

Oil production in the Latin American country has slumped over the past three years due to the dire economic situation and the increasing U.S. sanctions on its exports and companies selling Venezuela’s oil.

Earlier this year, Venezuela managed to achieve a slight increase in its crude oil output, only for the coronavirus pandemic to spread and cause significant demand destruction worldwide, putting more pressure on Maduro’s regime.

In March, Venezuela’s total exports of crude oil and fuel plunged by 26 percent month on month to just below 800,000 bpd—the second-lowest crude and fuel export volumes since the U.S. launched its pressure campaign on Maduro in January last year, according to data from Refinitiv Eikon and state oil firm PDVSA cited by Reuters.  

The U.S. is banking on putting additional pressure on Venezuela while its economy and society are battered from all sides, hoping to oust Maduro this time. Yet, analysts warn that this could only serve to close ranks within the regime.  

By Tsvetana Paraskova for Oilprice.com

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Leave a comment
  • Mamdouh Salameh on April 06 2020 said:
    The Trump administration is displaying the ugly face of its discredited ‘America first policy’ by not only strangling the Venezuela people by its intrusive sanctions but also by hampering the Venezuelan government’s efforts to deal with the coronavirus outbreak by not easing the sanctions at least for the period of the outbreak.

    Circumstantial evidence suggests that the Trump administration is so keen to effect a regime change in Venezuela and install its puppet Juan Guaido in order to get its hands on the country’s proven oil reserves, the world’s largest.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Antonio Trujoy on April 07 2020 said:
    Maduro stole the election And killed his people they are scattered all over South America and forced to beg on the streets of every city there! Communism is a blight and denies God it is doomed to fail! Jesus Christ is the only way to live, rightly acknowledge Jesus to have life and that more abundantly,. Jesus saves
  • William Naughton on April 07 2020 said:
    Maduro is a despot that has been selling his country out from under his people. Basically a thief protected only by a stolen election, some paid off military and any support Russia and China would sell to him to prop him up. He has taken, potentially, the richest country in South America and turned it into a failed nation. His predecessor did much of the initial work of dispensing with their wealth before any American sanctions.

    Two million of his people have fled his rule. Many of them before US stopped taking his oil.

    This is on Maduro.
  • Tehseen Jawaid on April 07 2020 said:
    Using economics to stimulate political change in the failed despot state of Venezuela is exactly what needs to happen to resolve decades of mismanagement. Venezuela people will be better served under a democratic model.


    Dr. Tehseen Jawaid

    Ph.D (Economics), Assistant Professor at Applied Economics Research Centre (AERC), University of Karachi

Leave a comment




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