We are in the early innings for rising oil prices: Energy strategist
The Biden administration plans to ease sanctions on Venezuelan oil in a bid to bring more of the country’s crude to Europe.
The U.S. will allow European companies still operating in Venezuela to divert more oil to the continent immediately while Chevron will be allowed to negotiate a resumption of operations in the country, according to a person familiar with the matter who spoke on condition of anonymity to detail the plans. The U.S.-backed Venezuelan opposition supports the move, the person said.
The easing of penalties come as tightening global oil supplies send the cost of crude and fuels skyward, threatening to worsen already historic inflation. More barrels from Venezuela would help alleviate the supply crunch while also aiding Europe in weaning itself from Russian energy amid the superpower’s invasion of Ukraine. U.S. benchmark crude fell on the news.
The move is meant to facilitate negotiations between the government of President Nicolas Maduro and the American-backed opposition, according to a second person who spoke on condition of anonymity. But it’s politically contentious, with some lawmakers arguing that the move only bolsters Maduro’s regime.
Italy’s Eni SpA and Spain’s Repsol SA are the only major European oil producers with operations in the country. They are working with the Biden administration to divert Venezuelan oil bound for China to Europe, one of the people said.
While Chevron currently isn’t allowed to drill for or export oil from Venezuela, the resumption of talks with state-owned PDVSA paves the way for the San Ramon, California-based company to obtain a new license allowing it to resume operations. It also signals that Venezuelan oil may be coming to the U.S., one person said.
Venezuela Vice President Delcy Rodriguez confirmed that the U.S. government authorized U.S. and European oil companies to “negotiate and restart operations” in Venezuela, according to a post on her Twitter account.
The Biden administration will also remove Carlos Erick Malpica Flores, a former PDVSA treasurer and former Treasury secretary, from a sanctions list, one of the people said. Malpica Flores, the nephew of Maduros’ wife, Cilia Flores, was sanctioned in July of 2017 along with 12 other Venezuelans.
The easing of penalties comes after officials from U.S. President Joe Biden’s administration visited Caracas, ultimately securing the release of Americans who had been detained in the country.