Venezuela’s Oil Industry Suffers from Revocation of Largest US License

The recent loss of a key U.S. license by Venezuela is expected to have significant impacts on the country’s oil exports and investment opportunities. The license, which allowed Venezuela to export oil to markets worldwide and secure investments, has been revoked due to the lack of progress in implementing an electoral roadmap agreed upon last year.

The U.S. Treasury has given companies 45 days to wind down pending transactions, particularly in crude and fuel sales, through a more restrictive license. This move is expected to impact the volume and quality of Venezuela’s crude and fuel sales, prompting a flurry of requests for individual U.S. deal authorizations.

While authorizations previously granted to oil firms like Chevron, Repsol, and Eni remain intact, the withdrawal of the key license marks a significant setback in President Joe Biden’s policy of re-engagement with Venezuela. The move stops short of a return to the “maximum pressure” campaign under former President Donald Trump, but the situation could change depending on progress towards the upcoming presidential election in Venezuela.

Venezuela’s state company PDVSA, which had benefited from the license to expand exports and improve cash flow, is now expected to face challenges in selling its oil without the license. Experts predict that PDVSA may have to resort to selling oil through intermediaries at discounted prices, mainly to Asia, unless enough U.S. individual authorizations are issued.

Overall, the loss of the key U.S. license is likely to have far-reaching consequences for Venezuela’s oil industry and economy, impacting its ability to secure investments and maintain its oil exports to key markets.