The U.S. Treasury has ordered Chevron to halt its operations in Venezuela, following Trump’s pledge to overturn Biden’s oil policies. This move threatens Venezuela’s economy and impacts U.S. refiners who rely on its heavy crude. Chevron’s withdrawal could lead to under-the-table dealings with other nations, leaving U.S. refineries with concerns over future crude supplies.
The U.S. Treasury has issued a 30-day notice for Chevron Corp. to cease its operations in Venezuela, ending its ability to extract and sell oil from the sanctioned nation. This decision, driven by former President Trump’s stance against President Biden’s oil concessions to Nicolás Maduro, represents a significant change that could severely impact both Venezuela’s struggling economy and U.S. oil refiners who depend on Venezuelan heavy crude. Normally, companies are given a six-month period to wind down operations, according to Bloomberg.
Chevron has played a crucial role in Venezuela’s oil production, contributing around 20% of the country’s output and providing vital revenue that is estimated at $6 billion. This income has been instrumental in stabilizing Venezuela’s economy amidst ongoing crises. Under the Biden administration, Chevron was permitted to send 240,000 barrels per day to U.S. refineries, which are equipped to process heavier crude grades. However, Trump’s recent actions will eliminate this supply starting April 3, prompting immediate market reactions, including a 1.3% dip in Chevron shares and a decrease in crude prices.
Florida Republicans have consistently criticized U.S. engagement with Venezuela, arguing that it reinforces Maduro’s regime. Trump reiterated this viewpoint by stating he would “reverse the concessions Crooked Joe Biden gave to Nicolás Maduro.” Additionally, Secretary of State Marco Rubio pledged to dismantle any oil and gas licenses connected to the Biden administration that have financially supported Maduro. Venezuela’s response to the embargo was expectedly negative, labeling it “harmful” and likely to adversely impact both U.S. interests and domestic companies.
With Chevron’s exit, Venezuela may resort to clandestine oil agreements with nations such as Iran and China, reviving past practices of under-the-radar transactions and evasion of sanctions. This raises pressing concerns about where U.S. refiners will obtain their heavy crude moving forward and the associated costs.
In summary, the U.S. Treasury’s decision to revoke Chevron’s operations in Venezuela marks a drastic shift in U.S.-Venezuela relations, likely exacerbating Venezuela’s economic crisis and impacting U.S. refiners reliant on Venezuelan crude. The political landscape remains contentious, as calls for stricter measures against Maduro intensify. The future for U.S. refiners seeking heavy crude is now uncertain as reliance potentially shifts towards riskier trading arrangements.
Original Source: oilprice.com
