Ukraine (bbabo.net), - The United States did not extend the six-month exception from sanctions on oil exports from Venezuela. At the same time, Washington does not want to limit supplies so as not to aggravate the situation on world markets, when oil is already trading at around $90 per barrel. American authorities plan to control flows manually.
The US Treasury Department announced that the general license that allowed oil and gas operations with Venezuela will not be renewed and will expire on April 18.
“After a thorough review of the current situation in Venezuela, the United States has determined that Nicolas Maduro and his representatives have not fully fulfilled the commitments they made under the road map that they signed with the opposition in Barbados in October 2023. Thus, General License No. 44, which authorizes operations related to operations in the oil and gas sector of Venezuela, expires on April 18 at 12:01,” the US Treasury reports. The department added that they provide a 45-day period for companies to complete all transactions with the Venezuelan state-owned company PDVSA, which is the oil and gas monopolist in the country.
At the same time, Washington did not cancel a separate license for the American energy giant Chevron and said that it would allow companies to work with Venezuela, but under separate licenses.
“For persons wishing to participate in transactions and activities previously permitted by license No. 44, the Department for Foreign Assets Control of the Ministry of Finance will consider separate requests,” the department’s clarification states.
According to Reuters, exemption from sanctions allowed Venezuela to increase oil exports to 900 thousand barrels per day - above pre-pandemic levels. For the United States, such a move was important to curb the rise in oil prices, since OPEC+ continued to reduce production in 2023, and Venezuela is not limited by any quotas.
This year, oil and gasoline prices are even more relevant as the US presidential election takes place in November and incumbent President Joe Biden is seeking re-election. In this situation, Washington finds itself in a dual situation: to save face and not curtail exports from the Latin American country, experts say. In their opinion, the United States has decided to take manual control of the export of Venezuelan oil.
“The United States suspended sanctions on the condition that Caracas create more democratic conditions for the presidential elections that will take place this summer,” says Igor Yushkov, leading FNEB analyst and expert at the Financial University under the Russian government. “But Venezuela did nothing, and Washington could not extend sanctions exemptions without losing face.”
At the same time, the expert notes, the US decision does not mean at all that oil exports from Venezuela will decrease.
“Firstly, there is a delay until the end of May for all operations. Secondly, exceptions from sanctions remain for the American Chevron. Therefore, either all Venezuela’s contacts with the outside world will be transferred to Chevron and, for example, what Indian companies previously did directly will now be done through an American company, which will earn even more. Or they will choose companies for personal exemptions from sanctions, since they have established a mechanism for individual licenses,” says Igor Yushkov.
In fact, nothing in current exports may change, says the leading analyst of the FNEB, but there will be negative things. The main thing is that investments in the development of the oil and gas sector will be strictly controlled.
“It will take time to rebuild under individual licenses. In addition, if someone expected to invest in production in Venezuela, now this desire will not be enough, since sanctions can be returned at any time. At the same time, the country’s oil and gas industry itself has been deteriorating since the days of Hugo Chavez and it needs billions of dollars in investments, and the current policy of sanctions scares off investors,” adds Igor Yushkov.
Managing Director of the National Rating Agency (NRA) rating service Sergei Grishunin believes that in the situation with Venezuelan sanctions, Washington could give priority to the election campaign in Venezuela in order to prevent the re-election of Nicolas Maduro and the pressure on the Venezuelan oil and gas sector could continue until the end of July.
“The shortage of high-sulfur oil in the United States can be covered by traders supplying Russian and Iranian oil. But given the expected aggravation between Iran and Israel, the US demarche will contribute to an increase in oil prices,” says Sergei Grishunin.
bbabo.Net