• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 5 days The United States produced more crude oil than any nation, at any time.
  • 10 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 6 days How Far Have We Really Gotten With Alternative Energy
  • 9 days James Corbett Interviews Irina Slav of OILPRICE.COM - "Burn, Hollywood, Burn!" - The Corbett Report
  • 9 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 11 days Biden's $2 trillion Plan for Insfrastructure and Jobs
  • 11 days e-truck insanity
  • 11 days "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)
Cyril Widdershoven

Cyril Widdershoven

Dr. Cyril Widdershoven is a long-time observer of the global energy market. Presently he works as a Senior Researcher at Hill Tower Resource Advisors. Next…

More Info

Premium Content

Will Biden Lift Oil Sanctions On Venezuela?

  • OPEC cuts are expected to create an increasingly tight oil market toward the end of 2023.
  • An increase in Venezuelan production could increase the supply of heavy crude.
  • International oil companies must be enticed to resume operations in Venezuela.

OPEC has always moved in mysterious ways, and it certainly caught the markets off guard when it announced an unforeseen production cut this Sunday. The bloc, led by wily Saudi Arabia, has made March’s bulls look heady, to say the least, and the term ‘stagflation’ has returned to the headlines after a brief hiatus. The U.S. government is being looked to for an answer having just staved off a bout of serious financial turmoil in the past two weeks alone.

From where I am standing, the Biden administration has little choice but to revisit last summer’s blueprint, namely turning to past foes to fill the gap where Gulf hydrocarbons would normally be. These plans to reengage major but distrusted suppliers like Venezuela were formed in the weeks after the first Russian tanks rolled onto Ukrainian soil. 

Europe’s economy buckled as oil and gas futures skyrocketed and the U.S. (a net energy exporter) had to open its own strategic reserves to prevent a backlash from motorists paying over the odds at the pump. All of a sudden, Biden needed more of the black stuff, and fast. 

However, this was made complicated by his strong-worded criticisms of Saudi Crown Prince Mohamed Bin Salman (known colloquially as MBS) on the Presidential campaign trail back in 2020. With Russian oil and gas under sanctions and OPEC not willing to do Biden any favours, the US began to consider new options to reverse the squeeze. As previously mentioned, Nicolas Maduro’s Venezuela was put forward as a controversial but promising potential partner.  Related: Inventory Draws Across The Board Push Oil Prices Higher

There’s little doubt that civil liberties and democratic norms have gone backward under Maduro – not that the provenly corrupt interim government has been an upgrade. Yet hard minds have their eyes on the 304 billion barrels of proven oil reserves beneath Venezuela’s surface, more than Saudi Arabia and with the gas to match. Reviving production, however, means unwinding the regime of sanctions imposed over four years under President Donald Trump. 

Enacted to pander to his base, a de facto trade embargo has made life even more desperate for ordinary Venezuelans. Indeed, they continue to suffer from shortages of medicines, food, and other basic goods – a tragic cocktail that has led to exodus and a surge in child mortality. Despite this grim picture, Venezuela simply wasn’t on the U.S.’ radar until energy markets went haywire in 2022. 

However, when war broke out, the Biden administration was admittedly quick to recognise two key factors when it came to the resource-rich nation not far to its south.  Firstly, that the Maduro administration had the supply to cover for the West’s rejection of Russian hydrocarbons. Secondly, it figured that the restraints on private sector operators needed to be loosened to get Venezuelan oil flowing. As a result, the U.S. took its first bold step, allowing Chevron to resume its longstanding operations in Venezuela last November. This represented an initial crack in the oil embargo, and in turn, Maduro began to overhaul the country’s socialist regulatory system to support private sector involvement in ‘strategic’ sectors like oil. When the first shipment of Venezuelan crude left for Mississippi in January, it seemed a lot more would follow, but in reality, this shipment was nothing more than a light reprieve. 

The sanctions waiver isn’t enough to jumpstart Venezuela’s crisis-stricken oil industry.  It’s clear that a number of large international oil firms, and not just a sole oil major, will be needed to start investing in a renaissance of the Venezuelan oil industry in order to get export volumes up again.  Like Chevron, European producers Eni and Repsol have an established presence in Venezuela and will resume operations if the Biden administration can guarantee that no action will be taken against them.  

The current spike in oil prices is making it more and more likely that the President will acquiesce. Drawing down the Strategic Petroleum Reserve (SPR) over the past year in order to suppress crude prices had some effect, but the U.S. can’t play the same trick twice. The SPR needs refilling and Europe is already looking to secure supplies for the next winter as the war on its doorstep plows on. Many on the Republican side of the aisle will balk at the repeal of sanctions to allow greater private-sector involvement in Maduro’s Venezuela. 

The question is, who else does the West turn to? OPEC is playing hardball and China’s reopening (though delayed) is beginning to pull supplies in an eastward direction. Venezuela, therefore, looks like an increasingly enticing option for Biden.


By Cyril Widdershoven for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • George Doolittle on April 06 2023 said:
    Gotta fuel up our tank treads over here, too absolutely!
  • Mamdouh Salameh on April 06 2023 said:
    Even if US sanctions against Venezuela are lifted today, Venezuela’s national oil company PDVSA will need at least 2 years and a lot of investment before it can produce additional 500,000 barrels a day (b/d). This would neither be enough to get President Biden out of the very tight corner he got himself into nor to start refilling US strategic petroleum reserve (SPR).

    Moreover, the astute Venezuelan President Nicolas Maduro who has so far survived the harshest US sanctions and CIA plots to for a regime change won’t be willing to oblige because he like many leaders of the world don’t trust the United States’ word. It could easily renege on any undertaking it makes once it satisfied its needs.

    Given the current situation in the global oil market, the SPR may never ever be refilled for three reasons:

    1- There are increasing signs that the current global energy crisis could become a permanent one particularly by the continued shrinking of the global spare production capacity including OPEC+’s and the lack of enough global investments in oil and gas.

    2- US shale oil which could have contributed to the refilling of the SPR is a spent force incapable of raising production in a meaningful way. The hype about shale potential by the US Energy Information Administration (EIA), the IEA and Rystad Energy amounts to nothing.

    3- OPEC+’s latest cut has made the global oil market tighter with no spare oil for sale.

    In time and with billions of dollars in foreign investments, Venezuela’s Orinoco Belt with proven oil reserves of 304 billion barrels is projected to be one of three regions of the world which will produce the very last three barrels of oil. The other two are the Arab Gulf region and Russia’s Arctic.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News