The US is fiddling with Venezuela’s sanctions relief card as OPEC Plus, a consultative body of non-OPEC major oil-producing countries such as OPEC and Russia, has decided to cut oil production by 2 million barrels a day starting next month.
The Wall Street Journal (WSJ) reported on the 5th (local time) that the US administration of Joe Biden is preparing to ease sanctions imposed on the Venezuela’s oil industry to allow U.S. oil refiner Chevron to produce local oil.
The Venezuelan government will resume talks with the opposition party to hold the 2024 presidential election fairly in return if significant sanctions are eased, sources told the WSJ.
The US and Venezuela’s governments and opposition parties are also negotiating to release hundreds of millions of dollars worth of Venezuelan funds frozen in U.S. banks to import food and medicine and secure equipment needed to improve old power and water facilities.
Once the deal is reached and Chevron resumes production, Venezuela will be able to export a limited amount of crude oil to the global market in the short term.
Venezuela, which has the world’s highest oil reserves, was a major oil producer in the 1990s, producing more than 3.2 million barrels a day, but related industries have collapsed over the past decade due to lack of investment, corruption and poor management.
In particular, crude oil production was further dampened by the withdrawal of Western companies in 2020 due to sanctions by the then Donald Trump administration.
However, Venezuela is emerging as an alternative source of crude oil that can stabilize oil prices in an unstable situation, with energy prices soaring after Russia’s invasion of Ukraine.
If the U.S. government approves Chevron’s locally produced oil exports, Venezuela will be able to double its exports to the current 450,000 barrels a day within months.
Opposition parties, led by opposition leader Juan Guaido, who recognizes him as an interim president, are opposed. This is because easing sanctions will help current President Nicolas Maduro maintain his regime.