On Wednesday the Biden administration paved the way for easing the sanction of Venzeula’s oil sector in response to a united deal between the government and the opposition parties about the 2024 election as per the latest crude oil news that arrived. This is one of the most extensive rollbacks from the Trump Era about the restrictions placed on Caracas.
After the discussion, a new general license has been issued by the US Treasury Department that has to authorize the OPEC member Venezuela which has been under crushing sanctions since 2019, to produce and export oil to its chosen market for 6 months without limitation.
As per the crude oil news surfacing over all mediums, the motive behind this move is political as well as economic.
The US Secretary of State Antony Blinken had welcomed President Nicolas Maduro’s electoral concession however he said that Washington has given him until the end of November to begin lifting bans on opposition presidential candidates and begin releasing political prisoners and “wrongfully detained” Americans.
In addition to this, a senior State Department Official while speaking to Reuters commenting on the conditions of anonymity, threatened to reverse sanctions and relief measures unless Maduro takes such imminent action.
Crude Oil news | Impact of negotiations moving forward:
The US has conducted months of negotiation through which Washington had pressed Caracas for initiating concrete actions towards the democratic election in return for lifting a few of the restrictions but not all of the difficult sanctions that had been imposed under the former US President Donald Trump.
This also hints at the signal that the Biden Administration is active and pushing toward changes right before the 2024 election to change the tides of crude oil news. They have been actively ventured into managing issues with Maduro on issues that range from energy to migrations, a shift from Trump’s “maximum pressure” campaign against the socialist government.
The party office for Venezuela’s ruling party Jorge Rodrigues said on the news that after the negotiations the sanctions relief had affected all oil activities. He further went on to say that the possibility of any person or company coming to Venezuela to invest is open.
Even though Wednesday’s announcement alleviated some tough sanctions, the US measures could reopen Venezuela’s door to dozens of oil companies with frozen or reduced operations in Venezuela.
Previously the US had imposed harsh sanctions on Venzuel to punish Maduro’s government following his 2018 re-election, which the US and other Western governments rejected as a sham.
What’s the endgame for the Venezuelan Oil Sector?
With all the easing of sanctions, Venezuela has a chance to expand in the oil sector. The changes that were announced on Wednesday include the issuance of 6 monthly general licenses allowing for the production, sale and export of Venezuela’s crude and gas without limitation on customer or destination and any other general license authorizing dealing with Minervan- the Venezuelan state-owned gold mining company.
however, the US Treasury Department had said in a statement that it was prepared to revoke those authorizations at any point in time if the representative of Maduro failed to follow through on the commitments in the deal with the opposition.
Furthermore, the US treasury has also removed the secondary trading ban on several bans on certain Venezuelan sovereign bonds and state-run oil company PDVSA debt and equity, though a ban on trading in the primary Venezuelan bond market remains in place.
US and Venezuela – Why did the US ease sanctions now?
The issues all began when Saudi Arabia and Russia continued their voluntary oil cuts that began earlier this year.
As per a Reuters article dated October 4, Saudi Arabia and Russia said that they would be continuing voluntary oil cuts through to the end of the year as the supplies have been tightening amidst the rising demand of oil prices.
According to the latest crude oil news, the oil joints and OPEC+ which comprises the countries of the Organization of the Petroleum Exporting Countries (OPEC) and leading allies including Russia have been cutting output since last year and they mention this as a pre-emptive action to maintain market stability.
However, it seems like the tides may be shifting in USA’s favour.
For several months now since Saudi Arabia and Russia have cut their crude oil output, the US has been in dire need of relief from that pressure and hence has been on the lookout for ways to boost the global flow of oil. In their venture, Venezuela’s exports could offset these costs and fill a big increase in investment in the country’s crippled oil sector as per views given by oil industry experts.
What will be the reaction of Saudi Arabia, OPEC and Russia to these decisions?
Will there be ramifications for the US?
We’ll be bringing you more updates so until then, Happy Trading!!
Commodity Samachar
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