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On Wednesday, the Biden administration decided to impose harsh oil sanctions on Venezuela once again, reprimanding President Nicolás Maduro‘s efforts to strengthen his rule.
This move comes only six months after the US eased restrictions, hoping to support the prospects of a democratic opening in the OPEC nation.
A key US official revealed this decision to reporters, stating that any US company investing in Venezuela would have 45 days to shut down operations to avoid adding to the uncertainty of global energy markets.
The official spoke anonymously to discuss US policy deliberations. In October, the US provided Maduro’s government with relief from sanctions on its state-run oil, gas, and mining sectors.
This was done after Maduro agreed to work with members of the opposition to hold a free and competitive presidential election this year.
Despite scheduling an election for July and accepting international observers to monitor the voting process, Maduro’s inner circle has obstructed the agreement by exploiting the ruling party’s complete control over Venezuela’s institutions.
Such actions include stopping his main rival, ex lawmaker Maria Corina Machado, from registering her candidacy or that of a designated alternative. Moreover, several of Machado’s aides along with many government critics have been imprisoned over the past six months.
The recent actions essentially mean that US policy has returned to what it was before the agreement was made in Barbados.
This makes it illegal for US companies to do business with state-run oil producer Petróleos de Venezuela SA, better known as PDVSA, without a specific license from the US Treasury Department.
It remains to be seen what effect this snapback will have on Venezuela’s struggling oil and gas industry, or whether it will put pressure on Maduro to offer a more level electoral playing field.
The initial reprieve was only granted for six months, which experts believe is insufficient time to attract the significant capital investments necessary to revive Venezuela’s long stagnant oil production.
However, by allowing Venezuela to send oil directly, instead of going through shady middlemen who charge exorbitant fees, Maduro’s government was able to increase oil revenue and raise much-needed cash during the six months of US sanctions relief.
Furthermore, the stiffening of sanctions doesn’t impact Chevron, which is the last significant US oil driller in Venezuela.
Chevron was allowed to increase shipments due to a license issued in 2022 amid concerns that Russia’s invasion of Ukraine would disrupt global energy supplies.
Elliott Abrams, who served as the Trump administration’s special envoy to the crisis in Venezuela, stated that “the true test of the administration’s seriousness about Venezuela is Chevron.” Abrams believes that the Biden administration prioritizes keeping oil prices down until the election and Chevron’s profits over US national security interests and freedom in Venezuela.
While the Biden administration’s decision shows its growing frustration with Maduro, experts believe that it is unlikely to revert to the failed “maximum pressure” campaign used during the Trump administration. This campaign only strengthened the leftist leader’s hand.
Christopher Sabatini, a research fellow at Chatham House in London, stated that “it became impossible for the White House to pretend that the Maduro government in any way was complying – or even intended to comply – with the implicit deal in the partial lifting of sanctions.”
Sabatini believes that ignoring this fact would have made the US look weak, undermining its credibility in leveraging sanctions not only on Venezuela but also on other countries. Opinion polls indicate that most Venezuelans would happily oust Maduro from office if given the opportunity.
Several regional leaders, including the leftist presidents of Colombia and Brazil, have joined the US in criticizing the Maduro government’s failure to abide by its commitments and allow a competitive election.
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