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US largely eases Venezuela oil sanctions after election deal

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The Biden administration largely eased sanctions on Venezuela’s oil sector on Wednesday in response to a deal between the government and opposition parties for the 2024 elections – the most significant rollback of Trump-era restrictions on Caracas.

A new general license issued by the US Treasury Department allowed OPEC member Venezuela, which has been under crushing sanctions since 2019, to produce and export oil to its chosen markets for the next six months without limitations .

US Secretary of State Antony Blinken welcomed President Nicolas Maduro’s election concessions, but said Washington had given him until the end of November to begin lifting bans on opposition presidential candidates and begin free political prisoners and “wrongfully detained” Americans.

A senior State Department official, speaking to Reuters on condition of anonymity, threatened to reverse sanctions relief unless Maduro took action.

The US measures follow months of negotiations during which Washington pressured Caracas to take concrete steps towards democratic elections in exchange for lifting some – but not all – of the harsh sanctions. imposed under former US President Donald Trump.

It also represents a significant step in President Joe Biden’s administration’s increased engagement with Maduro on issues ranging from energy to migration, a shift from Trump’s “maximum pressure” campaign against the government socialist.

Jorge Rodriguez, an official in Venezuela’s ruling party who is leading the government’s negotiating team in talks with the opposition, told state television on Wednesday that the sanctions relief affected all oil activities.

“The possibility for any person or company to come to Venezuela to invest is completely open,” he said.

Maduro’s government and the opposition reached an agreement in Barbados on Tuesday on electoral guarantees for an internationally supervised poll to be held in the second half of 2024. But the agreement did not allow Maduro to agree to reinstate opposition candidates who had been excluded from public office.

Blinken said in a statement that the United States was acting “consistent with our long-standing commitment to easing U.S. sanctions in response to concrete steps toward competitive elections and respect for human rights and fundamental freedoms.”

Wednesday’s announcements eased some of the harshest sanctions Venezuela has faced, but maintained several other restrictions. Further easing will depend on the extent to which Maduro takes significant additional steps toward free and fair elections, a U.S. official said.

Nevertheless, the latest US measures could reopen Venezuela’s doors to dozens of oil companies whose operations are frozen or reduced in Venezuela.

The United States imposed tough sanctions on Venezuela to punish Maduro’s government after his 2018 re-election, which the United States and other Western governments rejected as a sham. Since 2019, US sanctions have banned the state-owned oil company PDVSA
to export to the markets of its choice.

An oil sector in difficulty

The changes announced Wednesday include the issuance of a six-month general license authorizing the production, sale and export of Venezuela’s crude oil and gas, without limitations on customers or destinations, and another general license authorizing transactions with Minerven – the Venezuelan state gold company. mining company.

Venezuela will also be allowed to resume long-frozen trade activities with Caribbean countries, U.S. officials said.

The US Treasury Department, however, said in a statement that it was prepared to revoke these authorizations at any time if Maduro’s representatives did not respect their commitments in the agreement with the opposition.

The Treasury also lifted the secondary trading ban on certain Venezuelan sovereign bonds as well as PDVSA debt and shares, although a trading ban on the Venezuelan primary bond market remains in effect, it said .

The United States is seeking ways to boost global oil flows to ease high prices caused by sanctions against Russia over its war in Ukraine, OPEC+ decisions to cut production and, more recently, instability in the Middle East caused by the Israel-Hamas conflict.

But the chances that Venezuela’s exports can offset those reductions are slim absent a big increase in investment in the country’s crippled oil sector, oil industry experts said.

Venezuela could quickly reorganize its oil flows to win back cash-paying customers, but any impact on global oil prices is expected to be only temporary, experts said.

Talks between the government and opposition, aimed at finding a way out of Venezuela’s long political and economic crisis, took place on Tuesday for the first time in almost a year. They agreed to further meetings at an unspecified date.

The announced agreement provides that each party can choose its candidate for 2024 in accordance with its internal regulations. But he does not call into question the bans imposed on certain opposition figures – notably Maria Corina Machado, leading candidate in the October 22 primary organized by the opposition parties – which prevent them from exercising their functions.

Opposition sources said they had not given up trying to get the bans lifted.

U.S. officials also said they were pushing harder for the release of Venezuelan political prisoners, something the opposition had also demanded during negotiations with Maduro’s representatives, and of imprisoned Americans.

Foro Penal, a Venezuelan legal non-governmental organization, says 288 people have been imprisoned for political reasons. More than a half-dozen Americans are also believed to be detained, with several of them designated by the State Department as illegally detained.

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