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U.S. Sends Delegation To Venezuela As It Mulls Over Russia Oil Import Ban

The United States government has sent a group of officials to Caracas amid discussions of a ban on Russian oil imports.

According to a Reuters report, the trip was also part of Washington's efforts to isolate Russia internationally, with Venezuela being a known ally of Moscow in South America.

According to an unnamed source, the two sides held talks on Saturday, but the subject of the talks remained undisclosed. An agreement was not reached, according to the Reuters source.

The Financial Times also cited anonymous sources confirming the meeting, saying it involved Washington's top Latin America official, Juan Gonzalez.

The United States broke off diplomatic relations with Venezuela in 2019 after national elections that cemented Nicolas Maduro as president. Sanctions followed, targeting specifically Venezuela's oil industry—the lifeblood of the regime.

However, Washington could not completely stop Venezuelan oil exports despite deepening sanctions, with China and Russia coming to the rescue. Venezuela continues to export most of its oil to China.

Related: Oil Ends Wildest Week Ever As Russian War In Ukraine Rattles Market

But now that the Biden administration is discussing a ban on Russian oil imports with the European Union, it may reasonably be expected to look to Venezuela to replace the Russian barrels, even though most of what the U.S. has been importing from Russia has been refined oil products.

"I think it's expectable, even predictable, that the Biden administration would try to smooth things over with Venezuela and Iran given the crisis in energy supply caused by Russia's invasion of Ukraine," Francisco Rodriguez, a Council for Foreign Relations fellow and critic of the Venezuelan sanctions, told the FT.

Meanwhile, White House press secretary Jen Psaki told media last Friday that "We are looking at ways to reduce the import of Russian oil while also making sure that we are maintaining the global supply needs out there." 

"The idea was not to sanction oil and gas because of their essential nature, but oil is getting sanctioned by private actors not wanting to pick it up or ports not wanting to receive it and the longer this goes on the more supply chains are going to buckle," IHS Markit's Daniel Yergin explained, as quoted by Reuters. Such a development makes official sanctions a more likely move, it seems.

By Irina Slav for Oilprice.com

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