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The United States broadly eases oil sanctions on Venezuela after the election agreement

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Venezuelan President Nicolas Maduro speaks during a meeting with Iranian President Ebrahim Raisi at Miraflores Palace in Caracas, Venezuela on June 12, 2023. REUTERS/Leonardo Fernandez Viloria/File photo Obtaining licensing rights

WASHINGTON, Oct 18 (Reuters) – The Biden administration on Wednesday eased broad sanctions on Venezuela’s oil sector in response to an agreement reached between the government and opposition parties over the 2024 elections, the largest reversal of restrictions Trump imposed on Caracas.

A new general license issued by the US Treasury Department allowed OPEC member Venezuela, which had been under strict sanctions since 2019, to produce and export oil to markets of its choice for six months without restrictions.

US Secretary of State Antony Blinken welcomed the electoral concessions made by President Nicolas Maduro, but said Washington had given him until the end of November to begin lifting the ban on opposition presidential candidates and begin releasing political prisoners and Americans “unjustly detained.”

A senior State Department official, who spoke to Reuters on condition of anonymity, threatened to cancel the sanctions relief measures unless Maduro took such action.

The American moves come after months of negotiations in which Washington pressured Caracas to take concrete measures toward holding democratic elections in exchange for lifting some – but not all – of the strict sanctions imposed during the era of former US President Donald Trump.

It also represents an important step in President Joe Biden’s administration’s increased engagement with Maduro on issues ranging from energy to immigration, a shift from Trump’s “maximum pressure” campaign against the socialist government.

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Jorge Rodriguez, an official from Venezuela’s ruling party who is leading the government negotiating team in talks with the opposition, told state television later on Wednesday that the easing of sanctions affected all oil activities.

“The possibility of any person or company coming to Venezuela to invest is completely open,” he said.

Maduro’s government and the opposition reached an agreement in Barbados on Tuesday on electoral guarantees to hold internationally monitored elections in the second half of 2024. But the agreement stopped short of Maduro agreeing to reinstate opposition candidates who were barred from holding public office.

Blinken said in a statement that the United States is acting “consistent with our long-standing commitment to ease US sanctions in response to concrete steps toward competitive elections and respect for human rights and fundamental freedoms.”

Wednesday’s announcements eased some of the toughest sanctions Venezuela had faced but left in place a number of other restrictions.

However, the US actions could reopen Venezuela’s doors to dozens of oil companies with frozen or reduced operations in Venezuela.

The United States imposed harsh sanctions on Venezuela to punish Maduro’s government after his re-election in 2018, which the United States and other Western governments rejected as a sham. Since 2019, US sanctions have prevented state oil company PDVSA from exporting to selected markets.

Venezuela’s troubled oil sector

The changes announced on Wednesday include the issuance of a six-month general license allowing the production, sale and export of Venezuelan crude oil and gas, without restrictions on customers or destinations, and another general license allowing dealings with Minerven – the Venezuelan state-owned gold mining company. a company.

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But the US Treasury Department said in a statement that it is prepared to revoke those licenses at any time if Maduro’s representatives fail to follow through on their commitments in the agreement with the opposition.

The Treasury also said it had lifted a ban on secondary trading on certain Venezuelan sovereign bonds and the debt and shares of state oil company PDVSA, although the ban on trading in Venezuela’s primary bond market remains in place.

The United States is seeking ways to boost global flows of oil to mitigate rising prices resulting from sanctions imposed on Russia and OPEC+ decisions to reduce production.

But oil industry experts said that the chances of Venezuela’s exports compensating for these cuts are slim in the absence of a significant increase in investment in the country’s damaged oil sector.

Two decades of mismanagement and insufficient investment, coupled with US oil sanctions since 2019, are expected to thwart the ability of state-run PDVSA to quickly return to cash-paying oil markets and offer its crude at fair prices.

Talks between the government and the opposition, aimed at providing a way out of Venezuela’s ongoing political and economic crisis, were held on Tuesday for the first time in nearly a year. They agreed to hold further meetings at an unspecified date.

The agreement they announced stipulates that each side can choose its 2024 candidate according to its own internal rules, but it does not remove the ban on some opposition figures – including the primary candidate in the October 22 primaries, Maria Corina Machado – that prevents them from taking office.

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Opposition sources said that they have not given up trying to lift this ban.

Reporting by Matt Spitalnick; (Additional reporting by Mariana Parraja, Myla Armas, Vivian Sequeira, Daisy Buitrago and David Aller) Editing by Josie Kao, Lisa Shoemaker and Grant McCall

Our standards: Thomson Reuters Trust Principles.

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He focused on energy sanctions, corruption and money laundering with 20 years of experience covering the oil and gas industries in Latin America. Born in Venezuela and based in Houston, she is the author of “Oro Rojo,” about the troubled Venezuelan state-run company PDVSA, and a mother of three.

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