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The United States recently lifted some of its sanctions against Venezuelan oil. The decision comes as part of a deal to reward Venezuela for pro-democracy progress and in light of far more serious threats emerging around the world. The Biden Administration has warned, however, that the U.S. may reimpose these sanctions if Venezuela does not continue to make progress towards basic human rights and democracy goals.
Straight Arrow News contributor Peter Zeihan provides the context for this decision and reviews how it impacts the American oil economy. He adds that the United States should also scale up its own domestic refining capabilities in order to truly prepare for any future oil crisis.
The following is an excerpt from Zeihan’s Oct. 30 “Zeihan on Geopolitics” newsletter:
The Biden administration has suspended some sanctions on the Venezuelan oil industry thanks to Maduro’s (ever-so) slight easing of political restrictions. While this may pump some air back into the lungs of the oil sector, it will take a lot more to get Venezuela back to significant levels.
The history of Venezuelan crude is about as thick and complex as its dino juice. Back in the day, the U.S. built infrastructure to accommodate the viscous crude coming from the south. Once that crude became unreliable (in more than one way), the U.S. closed the door on those imports.
Now that some sanctions have been lifted, we’ll likely see some more steady flows of Venezuelan crude into the system…but it will take much more foreign investment and reestablishing of trust and reliability to revive the Venezuelan oil sector.
