Yves here. Yet more proof of how flexible US principles are. After working really really hard to topple Nicolás Maduro, Venezuela is about to become our new bestie, since they are currently the least ugly of the countries that have the heavier grades of oil we need to mix with our light crudes to make diesel.
By Felicity Bradstock, a freelance writer specializing in energy and finance. She has a Master’s in International Development from the University of Birmingham, UK. Originally published at OilPrice
- Rumors that the U.S. would lift sanctions against Venezuela in order to halt the oil price rally have been circulating since Biden sent a delegation to Caracas in March.
- The U.S. has now officially begun easing sanctions on Venezuela, a move that is driven by a desire to reduce gasoline prices rather than any geopolitical motive.
- Venezuela has expressed its desire that all sanctions be lifted and continues to work closely with Iran to rebuild its oil industry – despite Iran also being under sanctions.
When Biden sent a delegation to Caracas in early March, rumors began to circulate that the U.S. was considering reopening relations with Venezuela as oil prices soared. Now, after a period of silence from Washington on the subject, it appears that the U.S. is going to ease its sanctions on the Latin American oil giant. At the same time that the U.S. is lifting some sanctions, Venezuela is working with Iran to help revive its oil industry. It seems geopolitics has taken a back seat to the global energy crisis as oil prices soar. The U.S. imposed oil sanctions on Venezuela under the Trump administration in 2019 due to ongoing human rights violations by President Nicolás Maduro. Under President Biden, there were discussions about reopening some trade links by allowing crude-for-diesel exchanges on humanitarian grounds, although this never came to fruition. However, the U.S. oil and gas firm Chevron has been allowed to continue limited operations in Venezuela in order to help avoid the collapse of the country’s oil industry. There has been speculation in recent months around whether Biden would ease restrictions on Venezuela in response to global crude shortages and a severe rise in oil prices, with several commentators highlighting the dangers of such a move.
The White House announced in May that it was reconsidering its restrictions on Venezuelan oil, entering discussions with Maduro. Biden will now allow Chevron Corp. to negotiate its oil license with state-owned oil producer Petroleos de Venezuela (PDVSA), thereby reducing certain sanctions on the oil-rich state. Although no further oil drilling or additional revenues for the Maduro government will be permitted. The move follows a meeting between US officials and Maduro in March to discuss how to move forward.
Venezuelan Vice President Delcy Rodríguez confirmed rumors about the shift in policy by tweeting “Venezuela aspires that these decisions of the United States of America pave the way for the absolute lifting of the illegal sanctions that affect all of our people.”
But the Republican opposition has been quick to criticize Biden’s actions. Senator John Barrasso, the top Republican on the Senate Energy and Natural Resources Committee, strongly opposes the easing of sanctions on Venezuela, stating “our experience buying Russian energy should have taught President [Joe] Biden that buying energy from tyrants is a dangerous proposition.”
The White House apparently responded to a request by Maduro’s political opposition to ease sanctions, although the opposition said that the request came from Maduro. The Biden Administration hopes that dangling oil industry allowances in front of the president may encourage him to make greater political concessions with the opposition, putting Venezuela on track for free and fair presidential elections in 2024.
Despite ongoing sanctions, Venezuela has been trading oil products with U.S.-sanctioned Iran in recent months, using discreet shipping methods. Venezuela has also increased its oil exports to China. Iran has been using ship-to-ship transfers to deliver oil products to Venezuela, as well as other clandestine methods. Although Venezuela has around 303 billion barrels of proven oil reserves, its crude is extra-heavy and requires condensate to dilute it, which has been in short supply.
Iran has also shipped gasoline and equipment to Venezuela to support the reparation of PDVSA’s rundown refineries. This month, the state-owned National Iranian Oil Engineering and Construction Company signed a $116 million contract to restore the EL Palito 146,000-bpd refinery to restart production. This builds on the agreement between the two countries, established in 2021, to swap Iranian condensate for Venezuelan heavy crude.
In April, more than 200,000 barrels of Iranian heavy crude were shipped to Venezuela’s 310,000-bpd Cardon refinery. In addition, 400,000 barrels of Iranian oil reached the Dino I carrier, en route to the Jose port. A further 2 million barrels of condensate were expected to reach Jose the same month. Despite the ongoing sanctions, Iran and Venezuela are becoming increasingly successful at boosting their energy trades.
The new agreement follows a meeting earlier in the month between Iran’s oil minister and President Maduro in Caracus. The two sides discussed “the construction of routes and mechanisms to overcome the unilateral coercive measures imposed by the United States government and allied countries” in the meeting, according to the PDVSA. The two countries have been working together to overcome the sanctions imposed on both states by the U.S., as they each look for a way to redevelop their hard-hit oil industries.
Iran has boosted its oil production and exports over the last year as several countries have become more willing to open their doors to Iranian energy as a nuclear deal looks more promising. As a result of President Trump’s reimposition of sanctions on Iran after the U.S. withdrawal from the JCPOA, the country’s crude exports fell dramatically. But as talks for a new nuclear deal recommenced under president Biden last year, Iran’s oil production increased, rising to an average of 2.4 million bpd in 2021 and around 3.8 million bpd this year.
As the U.S. slightly eases its sanctions on Venezuela, it suggests greater potential for the country’s oil industry. Having boosted output and exports in recent months, it will likely build upon its existing relationship with U.S.-sanctioned Iran to help develop more trade routes and get ready to boost supply if greater allowances come into place.
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The US is ensuring that we will be the least liked, least trusted country in the world. We stab everyone in the back as soon as it is convenient, and we pretend we are going to be nice whenever it benefits us. I’ve watched for over 6 decades, and all I can think of is “why would anyone trust the US?” You are making a deal with the devil and you sign in blood when you deal with the US. From my perspective, it has always been the wealthy corporate owners (and their dutiful minions in the government) who have driven our heinous foreign policies, and always just for their own benefit.
I would say this is the logical geostrategical movement after the ‘tear Russia apart’ move. Next in the list to become US friend will be… Iran? Logical doesn’t mean clever or smart but I think this is just a natural consequence of the first error made. Let’s say it is a pragmatic movement. The big mistake was made before an becoming Venezuela-friendly is a move to mend the bad consequences of the former mistake.
If anyone was still unaware that US governments just pursue their own interest and this has nothing to do with ‘democracy’, ‘common values’ and the like, I guess that by now there are very few remaining so naive.
My guess is that Venezuelans, that had before become too dependent and indebted with China might welcome the fresh source of petrodollars. The US will have to invest in Oil infrastructures that had previously been let to degrade too much.
I don’t understand why Venezuela would want to work with the US when it’s clear that once the US gets what it wants the sanctions are back. Also, “free and fair presidential elections in 2024” is just another way of saying US instigated regime change and the return of Juan Guaido.
And I guess the gold reserves are just water under the bridge.
Believe the gold reserves were stolen by England whereas we stole Citgo. Is Biden planning to give back all the loot?
Of course all that happened during Trump and the Repubs are objecting to this latest move. It seems unlikely to change anything in time for November which is all the Dems seem to worry about.
I’ve lost track of who’s Dr Evil and who’s mini-me anymore.
I wondered about that. It would seem Venezuela has quite a bit of leverage right now. Hopefully they will use it.
With these negotiations Biden is de facto as well as de jure legitimizing Maduro’s presidency.
legitimizing Maduro’s presidency.
Who are we to determine who is “legitimate” and who isn’t?
Who is he to determine who is “legitimate” and who isn’t? At this point Biden is just a puppet swinging in the breeze. As Larov says, “legitimacy” means nothing in English.
Is someone else the legitimate president of Venezuela?
I’m pretty sure the Venezuelan voters did that.
Venezuelan presidential crisis
We don’t need no stinking voters.
(A lot ignored the US directive, much like our Russia sanctions)
Yes, but mostly Guaido’s supporters expressed their recognitions in English, in which language “legitimate” means nothing.
Voters are usually considered to be the citizen of a country or region, not the “international community”. At the very least the courts of a country if there are disputes.
I for one still think it is likely Bush Jrs election wins in FL ’00 or Ohio ’04 were bogus. Unfortunately the supreme court thought otherwise. Sadly no one imposed sanctions on Bush et al, and hundreds of thousands died.
When a society feels it is under threat, they are more likely to rally around whatever leader is there rather than overthrow them. See: Cuba, Russia, and many others.
US warm relationships may benefit Maduro personally but not his electoral chances.
Why not?
We seem to have no problem legitimizing the Saudi Regime.
Trying to keep tabs on what hapless nation the US is currently sanctioning, as well as the extent of the sanctions, is an all-consuming project. And the counter-sanctions!
NC readers could use a real-time list, like the Tradingeconomics.com site. Gosh, it could soon evolve into a Sanctions Futures market! Endless opportunities to monetize and profit from US craziness.
Trying to keep tabs on what hapless nation the US is currently sanctioning…
https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-list-search-tool
I came across that site this morning when trying to put together a timeline on the “weaponization of the dollar,” hope that helps. And I really haven’t had much luck in researching this, though it appears that this began in earnest back in 2001 by sanctioning banks that served as conduits for “terrorist cash,” and kicking into high-gear with sanctions on Iran about a decade later. I note that this “weaponization” has been a consistant trend across party lines.
Perhaps I am asking the wrong questions, not using correct terms in my search queries.
Are there any articles or websites that specifically focus on this “weaponization” issue? Which sectors/who will benefit from the de-dollarization of the global economy? And what will the US standard of living be like if the US dollar is no longer the primary reserve currency?
Thank you, LawnDart. Who knew! A ‘sanctions evaders list.’ The ‘non-SDN Communist Chinese military companies list.’ The ‘Blocked Persons list.’
Lawn Dart – Michael Hudson has spoken on this in one or more of his interviews in the past year. I don’t think any were restricted just to weaponization of the dollar, but I remember him talking about it.
Check his web site:
https://michael-hudson.com/
I do not understand President Maduro’s willingness to seat and deal with USA after USA has done the following: strangle Venezuela’s economy resulting in thousands of dead from malnutrition and lack of medicine, block the country from international financial institutions, taken over Venezuela’s main asset in USA called Citgo gas stations and refineries, several attempts to kill Maduro, putting a 15 million dollars on Maduro’s head, recognizing an unelected Mr. Guaido as Venezuela’s president over Maduro, and threatening many countries and companies from trading with Venezuela. For crying out loud, USA sent mercenaries to take or abduct Maduro. And spite all the above reasons, Maduro still wants to negotiate with USA. Maybe he has a dead wish.
Who else are they going to sell oil to? And who else has the cultural and people ties to seem attractive in non-economic ways?
Let’s see what Maduro asks for in return. We have not heard that side yet. It might prove to be very entertaining.
If he has any sense of irony, he should demand a plane load of baby formula before he’ll begin any talks.
So is baby formula turning into the new black market detergent?
Always was. It’s right up there with Tide and Downy fabric softer as a means of currency. It’s not fun being poor but you learn a lot.
$50 billion to Ukraine comes out to 10 billion bottles of Tide or 2 and half billion cans of Enfamil. Zelensky would be rich if he moved to Detroit.
Chavez would have demanded to be able to give away formula in the US.
Panic at the imperial disco. I’m sure Maduro understands that this is temporary and only because the US is desperate. But take what you can get when you can get it.
they would be crazy to take any offers from the free traders. if they do not understand the free traders motto, whats mine is mine, whats yours is mine and there will be no discussions period, then they will again find out what that means in a few months time.
parasites can never stop themselves, within months or shorter, there will be color revolutions, killings, sabotage, etc.
anyone dumb enough to get to friendly with the parasite driven free trading u.s.a., will get the yugoslavia/libya treatment.
wasn’t it the dim wit empty suit hollowman obama decreed they were a terrorist threat? i would say its the other way around.
sell a few barrels of oil to the u.s.a., priced in rubles or gold payments only.
I suppose radical conservation is out of the question, though. Sanctions against oil producers is one of those thuggish moves that we could hope would have the silver lining of reducing consumption, but it’s not to be.
Concerned individuals will have to reduce their personal consumption as best they can in the midst of a society and a political economy engineered to increase everyone’s consumption.
As some cynical statesman said long ago, states do not have friends, or other human-being style relationships like trust, gratitude, respect, moral standing, fear, etc., although such ideas are sometimes sold to the proles. States have interests and powers. That being the case, I am glad to hear the U.S. ruling class, having other concerns, has decided not to pick on Venezuela for awhile, which may benefit many of the actual human beings who make up Venezuela.
Will Alex Saab be freed?
Per the article: “The U.S. imposed oil sanctions on Venezuela under the Trump administration in 2019 due to ongoing human rights violations by President Nicolás Maduro.”
I guess I wasn’t paying enough attention at the proper time. Just what specific “human rights violations” were, allegedly, committed?
They made a non gendered corporate person feel unsafe in the marketplace.
Not sufficiently attending to the needs and interests of the oiligarchs and looting class…
And of course the usual imperial Fundamental Rules Statement #!, “Because we said so! So there!”
As I recall, it was something really egregious, like trying to get the rich to pay their taxes or end their capital strike, or arresting their preferred candidate for participating in a coup… Something like that.
I see.. Somehow, someone has confused “human rights” with “hegemonic rights”.
We make up all kinds of things, flood the TV with them and the stupid people suck it up and beside Trump was busy stealing the oil from Syria and Iraq thinking it belonged to us and if I remember right it was Washington that went whinnying to Venezuela about selling us oil not the other way around. the same as they did to Iran.
“Venezuela is ..currently the least ugly of the countries that have the heavier grades of oil we need to mix with our light crudes to make diesel” describes the Biden administration attitude well.
I guess that in its opinion Canada is even more ugly. Just not sure – politically or ecologically?
The Canadian government took away everyone’s rights because there was a traffic jam on a bridge. You think that’s a sign of strength?
So you’re on the side of political ugliness. Fair enough, I agree, this was not a sign of strength. But according to Wikipedia:
The Guardian reported on the state of emergency declared May 2016 in Venezuela. It’s still going on. Yeah, sure, as the link points out, different circumstances, but 6 years versus 9 days is not a sign of strength.
Also, per the UN Refugee Agency about 4 million Venezuelans have voted with their feet to leave Venezuela. Also not a sign of strength.
But according to Biden and his folks, Venezuela is a better partner than Canada. Whatever.
Ecologically. 500 billion barrels-of-oil-equivalent of Alberta Tar Dreck is pretty ugly ecologically , just on the sheer volume.
Now, if somebody starts talking seriously about mining the Orinoco Tar Dreck along the Orinoco River in Venezuela, then we are reaching higher levels of ugliness. There is at least an Alberta-load of Tar Dreck along the Orinoco River.
Ok, team environmental ugliness speaks up.
This July 2021 report from Argus media and a May 2021 report from NASDAQ reference restarting upgraders in the Orinoco Belt. The upgraders were built in the 90s, mostly nationalized in 2007 as joint ventures, continued with equipment failures and fires up to 2018, and mothballed in 2019 as sanctions hit. As far as I know, the upgraders are not, in fact, back in production. Perhaps “as Biden drops sanctions” they will finally return to service.
The Orinoco Belt and the Athabasca Tar Sands are not quite the same material, but the basic processes are and have the same impact. Both require either direct upgrading or being mixed with diluent and shipped to specialized refineries for integrated upgrading.
After the 2019 shutdown, Orinoco production had been mixed with diluent for integrated upgrading. It became more important to use diluent – lighter crudes – for gasoline, so the upgraders were scheduled for the 2021 restart. This “contributed to the withdrawal of PdV’s European partners.” ‘”This is an improvisation that risks an industrial accident, and the companies were afraid of that,” a senior industry executive said.’
So, on the face of it the Alberta Tar Dreck is less ugly than Orinoco’s, but I guess Biden knows better.
Felicity Bradstock is a marvel of the unspoken facts. With a masters degree in some sort of international finance and an energy analyst stationed in the UK? Gee, I’m so impressed. But, why didn’t any cynical Americans write this up? Glen Greenwald? Living up to her name, she happily glosses over every possible dirty deal we tried to push Venezuela into. Guaido is such a joke. But we keep joking around and somehow we wind up winning the deal. Go figure. Oil Price isn’t really interested in all the squabbles in the energy world – just the price of it. So that’s one reason. Just off the top I can imagine 3 or 4 reasons why we offered Maduro a deal. My guess is that our own industry is about to collapse. But nobody has mentioned any of our outright failures – like the entire Middle East fiasco; like the Ukranian defeat; like all of China’s amazing successes; like Iran surviving inspite of our criminal behavior; like pushing our most loyal allies, the EU, to the brink of misery; like putting the very reason for NATO to exist in the docket; like provoking Russia into nuclear war… I could go on. And it would be justified to look at all of these things because this war, is the war for the 21st century – it is the war to control oil. And Felicity has just said, Oh, gosh, nothing to see here. The least Oil Price could have done is give us a few details on our “big oil find” in British Guyana. Not a word on that one.
There, fixed it for ya.
How is this “Geopolitics taking a back seat”, as opposed to one geopolitical goal temporarily being downgraded to minimize the consequences of pursuing a larger one?