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White House Plans to Reimpose Sanctions on Venezuelan Oil

PDVSA
Courtesy PDVSA

Published Apr 17, 2024 8:32 PM by The Maritime Executive

Venezuelan President Nicolas Maduro has not kept up his end of a bargain to allow free and fair elections, according to the White House, and U.S. sanctions on the nation's oil exports will likely be allowed to re-enter into force at the end of the week. 

Tanker operators who serve the Venezuelan market have already resumed "dark-fleet" sanctions-evasion behavior ahead of the anticipated restrictions, according to TankerTrackers.com. 

In October, American officials worked out an agreement with Maduro's government that would lift long-running sanctions on Venezuelan petroleum if Maduro loosened restrictions on the country's electoral system. The deal called for the dictatorship to enter talks with an opposition party to set conditions for the next presidential election, scheduled for July 2024. That has not happened, according to the White House. Though there has been some progress, "Maduro and his representatives prevented the democratic opposition from registering the candidate of their choice, harassed and intimidated political opponents, and unjustly detained numerous political actors and members of civil society," State Department Matthew Miller said in a statement. 

U.S. officials met with Maduro's representatives in Mexico last week to give them a final warning, but little progress has been made, the White House quietly told reporters on Wednesday. The waiver will expire and sanctions will phase back into effect over the next six weeks. 

However, even when sanctions go back into effect, some oil companies will still be allowed to continue to operate in Venezuela under special licenses on a case-by-case basis. Potential candidates may include Chevron, which has extensive business interests in Venezuela and obtained a unique license of its own in November 2022. 

Reimposing sanctions on Venezuela's exports will create more political risks for the Biden administration. If the sanctions regime damages Venezuela's battered economy, it could send more migrants flooding northwards towards the U.S. border. Sanctioning Venezuela's oil exports could also increase the global price of crude, though Venezuela will still be able to find enough customers and supply chain partners to limit the supply-side effects of the ban.