US considers easing Venezuela sanctions after failure on OPEC+ diplomacy

7 Oct 2022

Quantum Commodity Intelligence - The Biden administration is preparing to scale down sanctions against Venezuela, allowing US oil major Chevron to resume pumping oil and paving the way for a potential reopening of US and European markets to oil exports from Venezuela, reported the Wall Street Journal.

In exchange for the significant sanctions relief, the government of Venezuelan President Nicolás Maduro would resume long-suspended talks with the country's opposition to discuss conditions needed to hold free and fair presidential elections in 2024, said the report, referencing sources familiar with the proposal.

The moves come after intensive US diplomatic efforts to talk Middle East producers out of steep production cuts via the OPEC+ alliance failed. In particular, Washington was said to have targeted Saudi Arabia and the UAE through various diplomatic channels.

According to the WSJ report, the US, Venezuela's government and some Venezuelan opposition figures have also worked out a deal that would free up hundreds of millions of dollars in Venezuelan state funds frozen in American banks to pay for imports of food, medicine and equipment for the country's battered electricity grid and municipal water systems.

US officials said details are still under discussion and cautioned that the deal could fall through, because it is contingent on Maduro's top aides resuming talks with the opposition in good faith.

"There are no plans to change our sanctions policy without constructive steps from the Maduro regime," Adrienne Watson, spokeswoman for the National Security Council, told the WSJ.

If the deal goes through and Chevron, along with US oil-service companies, would be allowed to work in Venezuela again, it would put only a limited amount of new oil on global markets in the short term.

Venezuela was once a major oil producer, pumping more than 3.2 million barrels a day during the 1990s, but the state-run industry has collapsed over the past decade because of underinvestment, corruption and mismanagement, concluded the report.