US continues to explore sanctions relief for Venezuela

In an effort to secure new supply sources and mitigate the rapid rise in oil prices, the administration of US President Joe Biden has continued to explore the possibility of easing sanctions on Venezuela.

Following Washington’s decision to ban oil imports from Russia in response to the latter country’s invasion of Ukraine, senior US officials held talks with Venezuelan President Nicolás Maduro in Caracas earlier this month. This marked the first time that White House representatives had made an official trip to Venezuela since 1999.

Should the sanctions be lifted, US-based companies would be allowed to invest in Venezuela’s oil sector. This could raise the South American state’s production by approximately 800,000 barrels per day (bpd) and might also serve as an opportunity to reduce Russian influence within Venezuela. PdVSA, the national oil company (NOC), has formed several joint ventures with Russian investors.

The Biden administration’s decision to consider the easing of oil sanctions against Venezuela has been met with criticism inside the US. Both Republicans and Democrats have expressed reservations about allying with Venezuela, saying that the restoration of democracy ought to be a prerequisite for co-operation with the Maduro regime.

The US government first imposed sanctions specifically targeting Venezuela’s oil industry in 2019, shortly after Maduro secured re-election to the presidency in an election that was widely believed to be illegitimate. The sanctions regime was then ratcheted up several times by the administration of Donald Trump, with the aim of barring PdVSA’s access to financial markets, shipping contractors and other forms of support as well as global oil trade.

Venezuela’s opposition leader Juan Guaidó, who was recognised as Venezuela’s interim president after Maduro’s questionable re-election, was informed of these developments by US officials following the talks with Maduro. According to a source close to the matter, Guaidó was angered by the news and argued that Venezuela did not have the capacity to produce enough crude oil to bring world oil prices down.

The opposition leader also wrote in a letter to Biden that any decision to lift oil sanctions would effectively be rewarding a dictator whose actions had led millions of Venezuelans to leave the country.