The United States has mandated Chevron to halt its operations in Venezuela within a month, significantly impacting the regime of Nicolás Maduro, which relies on oil revenue. This marks a dramatic shift in Donald Trump’s policy, moving from engagement back to sanctions. Experts warn of severe economic consequences for Venezuela due to this decision, including potential recession and an increase in migrant outflows.
On Tuesday, the United States imposed a one-month deadline for Chevron, the energy giant, to cease its operations in Venezuela, dealing a severe blow to the financially strained authorities in Caracas. Currently, Chevron accounts for nearly a quarter of Venezuela’s oil production, generating crucial revenue for Nicolás Maduro’s administration. However, the Financial Crimes Enforcement Network stated that Chevron must halt its operations within 30 days, a term that industry experts regard as impractical.
This directive indicates a significant shift in former President Donald Trump’s approach towards Venezuela, a nation that has been a long-standing adversary of the United States. During his first term, Trump implemented a strategy of “maximum pressure” on the Maduro regime, enforcing sanctions and restricting US oil companies’ activities. Nevertheless, upon returning to office, he initially appeared to engage with Maduro, allowing negotiations for prisoner exchanges while seeking to bolster relations with Caracas.
Trump’s engagement faced considerable backlash, especially from Florida Republicans advocating for support of pro-democracy factions that have historically been suppressed in Venezuelan elections. Under increasing political pressure and following a tough budgetary challenge in Congress, Trump altered his stance, criticizing Venezuela for failing to conduct fair elections as previously agreed upon. Experts predict that the termination of Chevron’s operations could lead to a recession in Venezuela and exacerbate the current exodus of its citizens.
The cessation of Chevron’s contributions may deprive Maduro’s government of approximately $150 to $200 million monthly, significantly impacting foreign reserves. Venezuelan Vice President Delcy Rodríguez condemned the US government’s actions, stating, “The new US government is trying to hurt the Venezuelan people. It is a self-inflicted blow that is going to increase fuel prices.” On a separate note, oil markets appeared stable after the announcement, coinciding with OPEC’s decision to raise production. However, Chevron’s stock price saw a decline of about 2.8 percent over the week due to these developments. Venezuela’s oil production has plummeted to just over one million barrels per day from a peak of 3.5 million, amid economic turmoil exacerbated by low oil prices and harsh US sanctions. Notably, European companies such as Eni, Repsol, and Shell, which also have operations in Venezuela, remain unaffected by this recent US action.
In conclusion, the US government’s ultimatum to Chevron to terminate its Venezuelan activities marks a notable shift in policy from engagement back to sanctioning measures against Nicolás Maduro’s regime. The cessation of operations threatens to plunge Venezuela into deeper economic distress, restricting vital revenue streams for the government. As the situation evolves, the repercussions for both the Venezuelan populace and the oil market will require careful observation.
Original Source: www.rnz.co.nz
