US revisits oil and gas sanctions

The Biden administration will reimpose oil and gas sanctions on Venezuela after President Nicolás Maduro failed to comply with a United States-backed agreement to allow opposition candidates and parties to run in July elections, the State Department says.

A six-month general licence, issued in October as part of a deal between Maduro and the Venezuelan opposition signed in October, would not be renewed, the officials said. The Treasury Department issued a new, limited licence allowing businesses operating in Venezuela, including international oil companies, until May 31 to wind down their operations there.

The decision comes amid US election year concerns that both global oil prices and the number of Venezuelan migrants seeking US entry may increase as restrictions are reimposed on the primary source of Venezuela’s income.

The Biden administration’s temporary licence allowed buyers to purchase Venezuelan crude for the first time since former president Donald Trump’s maximum-pressure policy effectively removed it from the international market.

China, which ignored the US sanctions, became Venezuela’s main buyer and Iran its main supplier of chemicals needed to dilute and produce the country’s heavy crude oil.

The revocation of the six-month general license does not affect the oil giant Chevron, which maintains significant operations in Venezuela and is allowed to extract oil and sell it in the US.

The Treasury Department is encouraging other companies to apply for “specific” licences to continue or begin operations in or with Venezuela or engage in non-monetary swaps for oil, according to senior administration officials. Unlike general licences, the existence or terms of special licences do not have to be made public.

“The administration is leaving the door open for US and other Western companies to maintain a footprint in Venezuela,” said Geoff Ramsey, a senior fellow at the Atlantic Council. “It’s a delicate balance, but one that ensures the White House retains leverage.”

From an oil industry perspective, “this should do the job,” said an adviser to energy companies engaged in the Venezuelan oil sector, who spoke on the condition of anonymity. – Washington Post