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U.S. Links Renewal of Venezuela Oil Sanctions Easing to Progress on Elections

The United States announced that it will not renew a temporary license that significantly eased sanctions on Venezuela’s oil and gas sector unless President Nicolas Maduro demonstrates progress towards commitments for free and fair elections this year, according to a State Department spokesperson on Monday, just three days before the license is set to expire.

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The U.S. has expressed concerns regarding Venezuela’s electoral process and Maduro’s alleged failure to fulfill his primary promises for the July 28 presidential elections.

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In the absence of substantial progress by Maduro and his representatives in implementing the provisions outlined in the roadmap, the United States will not extend the license beyond its expiration on April 18, 2024, stated the spokesperson.

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The Biden administration has expressed skepticism about Maduro’s ability to make adequate concessions before Thursday’s deadline to meet U.S. demands. Despite a clandestine meeting between U.S. and Venezuelan officials in Mexico last Tuesday, sources familiar with the discussions reported minimal progress in bridging their differences.

The partial sanctions relief was granted by the U.S. in October in response to an election agreement brokered in Barbados between Maduro’s government and the opposition. The agreement notably included provisions allowing the opposition to select its presidential candidate.

The failure to renew the current license does not preclude the possibility of the U.S. issuing a new, more restrictive license in its place.

Venezuela’s oil exports surged in March to their highest level since early 2020 as buyers rushed to finalize purchases ahead of the anticipated expiration of the U.S. license, as per reports from Reuters earlier this month.

Venezuela’s state-owned oil company, PDVSA, has affirmed its readiness for any scenario, including the reimposition of full oil sanctions.

President Biden’s advisers are currently exploring various options ahead of Thursday’s expiration of the U.S. license, which has permitted Venezuela to freely market its crude oil, according to sources familiar with the matter.

While the Biden administration is committed to imposing consequences on Maduro’s government, discussions are ongoing regarding the extent of sanctions relief withdrawal, though it is anticipated to fall short of reverting to the Trump-era “maximum pressure” policy.

Among the options under serious consideration is to allow Venezuela to continue selling crude oil on global markets while reinstating a ban on the use of U.S. dollars in such transactions. This move would necessitate Venezuela to transition to other currencies and expand barter arrangements and swaps.

“We are moving forward, with or without a license. We are not a colony of the U.S.,” remarked Maduro on his weekly television program, addressing the decision.

A bipartisan group of U.S. senators urged Biden last week to contemplate individual sanctions against those directly responsible for repressive actions. Previous U.S. administrations have already sanctioned numerous Venezuelan officials.

U.S. officials do not intend to revoke Chevron’s authorization, granted in 2022, to sell oil from its Venezuela joint ventures in the U.S., which is renewed automatically each month. Similarly, authorizations for European oil companies to procure Venezuelan oil are expected to persist, according to insider sources.

Current U.S. deliberations are influenced by concerns about whether reimposing sanctions on Venezuela’s energy sector could lead to higher global oil prices and exacerbate the influx of Venezuelan migrants to the U.S.-Mexico border, particularly as Biden campaigns for reelection in November.

Separately, the U.S. Treasury Department extended a license shielding Venezuela-owned refiner Citgo Petroleum from creditors through Aug. 13.

Venezuela’s opposition is engaged in internal discussions regarding candidacy for the July 28 election and potential nominees.

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