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The United States is considering an easing of sanctions on Venezuela in order to increase the flow of Venezuelan oil to U.S. and European markets, the Wall Street Journal reported, citing unnamed sources in the know.
The sanction relief is aimed at Chevron, which used to operate in Venezuela but sanctions made it pull out of the country.
According to WSJ sources, the deal with the Maduro government will see the latter resume talks with the opposition to discuss holding fair elections in 2024. In exchange for that, Washington has agreed to free some Venezuelan state assets frozen in U.S. banks. These will be used to pay for food, medicines, and equipment for Venezuela’s electricity grid and water supply network.
“There are no plans to change our sanctions policy without constructive steps from the Maduro regime,” said a spokeswoman for the National Security Council, as quoted by the WSJ.
The softer U.S. course towards Venezuela began earlier this year, after Russia’s invasion of Ukraine, when sanctions began to pour on Moscow, targeting, among others, its hydrocarbon industry. The U.S. was the first country to impose a ban on Russian oil imports and found itself needing replacement supplies.
Europe also needs urgent replacement of Russian oil ahead of an embargo entering into effect in December. Reports in March suggested that the U.S. was ready to lift some sanctions on Venezuela to make it easier for Venezuelan crude to start flowing into global markets again but since then there has been little reported progress.
“Venezuela is ready and willing to fulfill its role and supply, in a stable and secure manner, the oil and gas market that the world economy needs,” Venezuela’s President Nicolas Maduro said last month. In August, Venezuela suspended oil deliveries to Europe under an oil-for-debt program and asked companies to provide it with fuel in exchange for future cargoes.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com
But Venezuela’s crude oil production doesn’t currently exceed 1.1 mbd with the bulk of its exports of 900,000 barrels a day (b/d) going to China as payment for Chinese loans extended over years to the Venezuelan government. This leaves little crude to be exported to the US or Europe.
Even if Venezuela has a lot of crude to export, not a single barrel will go to the US before all sanctions against it are lifted.
The truth of the matter is that in this tight global oil market the US is looking for a way to lift sanctions against Venezuela without losing face since the sanctions have failed miserably anyway.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert