United States To Release Venezuela From Some Oil Sanctions

Washington will start to relax restrictions placed on U.S.-based oil company Chevron with regards to its crude business in sanctioned Venezuela.

Chevron will soon be able to negotiate directly with the Venezuelan government and its state-run oil company, PDVSA, with the final details of the new arrangement expected to be complete as early as today.

The move is thought to support the talks between Venezuela’s socialist government led by Nicolas Maduro and the Western-backed opposition government led by Juan Guaido, the Washington Post reported on Tuesday afternoon.

According to Washington officials who spoke to the Post on the condition of anonymity, the license to negotiate, granted to Chevron, could be just the first step towards relaxing other oil-related sanctions on Venezuela.

The opposition government in Venezuela is expected to announce today that it has reached an agreement with Maduro to return to the negotiating table as early as this month.

Rumors surfaced shortly after Russia invaded Ukraine that the United States was entertaining the notion of relaxing crude oil sanctions on Venezuela if the Latin American country agreed to export this crude oil to refiners in the United States. As far back as two months ago, Chevron had already begun to assemble a trading team to market oil from Venezuela and professed to be ready to expand its role in the four joint ventures that it shares with PDVSA.

Venezuela holds the largest proven oil reserves in the world. A relaxing of sanctions could unleash another 400,000 bpd per day at a time when global crude oil consumers are scrambling for less expensive crude. 

The move is telling of how critical the increased supply of crude oil is to the current U.S. administration.

By Julianne Geiger for Oilprice.com

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