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The United States is reimposing sanctions on Venezuelan oil, saying President Nicolás Maduro’s revolutionary socialist government has “failed to deliver on its commitments to hold a free and fair presidential election this year.”
The move amounts to an acknowledgment by the Biden administration that sanctions relief, granted six months ago, has so far failed to convince Maduro to stage a truly competitive contest.
Aware of the risk that new sanctions against Venezuela will drive up oil prices during a US election year, Washington will allow US major Chevron to pursue a joint venture with Venezuelan national oil company PDVSA, which is steadily increasing its production.
In October, Maduro and the U.S.-backed opposition coalition signed an electoral deal in Barbados, but the ink had barely dried when his government launched a sweeping crackdown.
The main opposition candidate, María Corina Machado, was banned from running, her chosen replacement candidate was not allowed to register, and some members of her campaign team were arrested . Polls had indicated that Machado would beat Maduro by an overwhelming majority.
“We have determined that while Venezuelan authorities have met some key commitments, they have also failed in several areas,” a senior US administration official said, describing “an ongoing pattern of harassment and repression against government figures.” the opposition and civil society.
The US administration official added that Maduro had supported “certain aspects” of the Barbados agreement, including setting an election date, updating voter lists and “launching a process allowing international observation of elections.
In another collaborative gesture, Washington and Caracas concluded a prisoner swap in December, in which 10 Americans – including six classified by the United States as wrongly detained – were released from a Venezuelan prison in exchange for the release of Alex Saab, a Colombian businessman and Maduro ally who U.S. prosecutors accuse of siphoning $350 million from Venezuela into U.S. accounts.
Despite the government’s bellicose statements in recent weeks, Maduro said Monday he would “never close the door to dialogue” with the United States, adding that his negotiators met with Washington’s envoys in Mexico last week. “I tell the negotiators to give the president [Joe] Biden the following message: “If you want, I want. If you don’t want to, I don’t want to,” Maduro said.
The Biden administration is juggling a desire to punish Maduro for abandoning his promises of free and fair elections with other concerns. He fears pushing Venezuela further into the arms of its allies, Russia and China, and worries that new sanctions could spur more Venezuelan migration to the United States.
Once one of the world’s leading oil producers, Venezuela’s production has collapsed from nearly 2.9 million barrels per day in 2014 to less than 400,000 bpd in 2020, following years of mismanagement combined with Trump-era “maximum pressure” sanctions aimed at ousting Maduro.
Helped by the temporary lifting of sanctions in October and the increase in Chevron’s oil joint venture, Venezuela increased its crude production to an average of just over 800,000 b/d in the first quarter of this year, according to OPEC figures.
Venezuela has the largest oil reserves in the world, as well as an abundance of natural gas. Energy companies have taken advantage of sanctions relief to flock to Caracas over the past six months in search of possible deals with Maduro.
Shell and Trinidad’s national gas company have signed a deal to export Venezuelan offshore gas via the Caribbean island, while Spain’s Repsol and France’s Maurel & Prom have also signed agreements, according to media reports. These were covered by separate US sanctions licenses. U.S. officials declined to say whether those permits would continue, citing commercial confidentiality.
Analysts said the decision to tighten sanctions on the oil sector would have a limited short-term impact on Venezuela’s current production and exports, but would harm its long-term recovery.
