Page 6 - NorthAmOil Week 10 2022

NorthAmOil COMMENTARY NorthAmOil

Russia-Ukraine conflict triggers a

change in US-Venezuela relations

Sanctions may be on the chopping block as Washington looks for ways to make more

oil available

US-VENEZUELA OBJECTIVELY speaking, not much time
has passed since Russia began its invasion of Impact of sanctions
WHAT: Ukraine. Nevertheless, the invasion has already Over time, the US sanctions regime has inflicted
A delegation of US triggered major shifts on the geopolitical scene. serious damage on the Venezuelan economy.
officials has reportedly One such shift may be playing out right now The most recent rounds of trade restrictions
visited Venezuela to between the US and Venezuela. have been particularly damaging, as they have
discuss renewal of severely limited the country’s ability to extract
access to world oil Background and monetise its most valuable resources. In
markets. Washington and Caracas have been at odds for practical terms, they have reduced Venezue-
some time. lan oil production from 1.7mn barrels per day
WHY: Economic relations between the two sides in 2018 to 560,000 bpd in 2021, a drop of more
Washington may be have become steadily more strained since 1999, than 67%.
willing to sacrifice its when Hugo Chávez, an outspoken critic of Certainly, Trump’s loss to Joe Biden in the
sanctions policy for the capitalism and free markets, became president 2020 presidential election did generate some
sake of increasing crude of Venezuela. These pressures intensified after speculation about the possibility that US pol-
supplies. Caracas re-nationalised the oil industry in 2007, icy toward Venezuela might change. Biden and
in a move that directly affected ExxonMobil and his team are generally understood to be open
WHAT NEXT: other US-based companies. However, Chevron to the idea of softening sanctions for human-
Although political and other US firms maintained a presence there itarian reasons, on the grounds that they have
opposition to co- and continued to co-operate with the national wrecked the Venezuelan economy and impov-
operation with Venezuela oil company (NOC) PdVSA, even as concerns erished ordinary citizens without accomplish-
will persist, the tone of mounted in Washington and elsewhere about ing their goal of forcing changes in the political
the conversation between political repression, first under Chávez and regime.
the US and Venezuela has then under his successor Nicolas Maduro, who Even so, the sanctions regime has mostly
changed significantly. became president in 2013. remained in place, with minimal changes since
The US government began imposing eco- Biden took office in January 2021. This is largely
nomic sanctions on Venezuela more than 15 because the current administration’s focus has The US
years ago. Initially, it did so because of concerns been on domestic affairs – above all, on man-
about the country’s involvement in drug traf- aging the coronavirus (COVID-19) pandemic government
ficking and about certain government officials’ and its fallout. But it also has something to do began imposing
ties to leaders of terrorist groups such as Hez- with the fact that there has been little appetite in
bollah. But in 2015, President Barack Obama Washington for the kind of political wrangling economic
expanded the scope of the sanctions regime, that would inevitably follow proposals for lifting
citing concerns about the Maduro administra- the trade restrictions. sanctions on
tion’s human rights violations and acts of polit- After all, Venezuela does not exactly inspire
ical repression. sympathy in the US public relations realm. It Venezuela more
These concerns intensified after Venezue- is a country governed by a socialist regime, led than 15 years
la’s presidential elections in December 2018. by a president who is prone to making hostile
In response to reports that Maduro had used remarks about the US and about its chosen ago.
fraudulent means to ensure that he remained political and economic systems. And the trade
in office, US President Donald Trump began restrictions are backed by Senator Marco Rubio
imposing additional sanctions that specifi- of Florida and other well-known Republican
cally targeted the oil industry. Between early legislators with close ties to the Cuban and Ven-
2019 and late 2020, the Trump administration ezuelan immigrant communities.
sought to cut off every avenue that PdVSA had
of accessing world oil markets, including ship- Energy market turmoil
ping and financing and equipment supplies as Now, though, there are other factors to consider.
well as crude and fuel trading and sales. Russia’s invasion of Ukraine hasn’t just upset the

P6 www. NEWSBASE .com Week 10 10•March•2022