According to The Wall Street Journal, the Biden administration put out a proposal that would loosen sanctions against Venezuela and permit Chevron to resume oil production there after the consortium agreed to its greatest production reduction since the COVID-19 epidemic.
According to the WSJ, which cited persons familiar with the agreement, the U.S. will unblock hundreds of millions of dollars in Venezuelan state cash held up in American institutions in exchange for the nation allowing Chevron to pump oil on its territory. The suggestion follows OPEC’s earlier agreement on Wednesday to reduce production of oil by two million barrels per day, a move the White House dubbed “shortsighted.”
According to the WSJ, the Biden administration thinks that allowing Chevron and other American businesses to begin operations in Venezuela, a pioneer in the field of OPEC, could indicate a rise in global supplies and a consequent decline in oil prices. Because of mounting worries about a worldwide recession, OPEC and its partners under the leadership of Russia reduced production to maintain stable prices.
The White House is rushing to react to rising gasoline prices because it is worried that they would harm the Democrats’ chances of winning the midterm elections in November. On Wednesday, energy researcher Patrick De Haan estimated that the OPEC production cuts might result in a 15–30 cent increase in local gas prices.
According to The Congressional Research Service, significant sanctions have been placed against Venezuela’s oil sector in recent years as a result of American opposition to President Nicolas Maduro’s dictatorial rule and allegations of human rights violations by his government. According to the WSJ, fewer U.S. sanctions might revitalize Venezuela’s oil sector and boost its impact on the world oil market.
According to the WSJ, Venezuela will utilize its frozen assets to pay for food, medication, and equipment required to fix its electrical grid and water infrastructure. However, Maduro’s government would only get these monies if it consents to talk to Juan Guaidó, the head of the opposition who the US recognized as the nation’s legitimate leader in 2019.