Daily Energy Report

Venezuelan oil recovery & sanctions, US sanctions Iran, new Russian trade routes, Nigeria deal with Shell, WH climate distraction, Carbon price falls, Scotland ditches climate target, and more.

Chart of the Day: The Recovery of Venezuelan Oil Production 

Summary

Figure (1) above shows trends in Venezuelan oil production as reported by secondary sources in the OPEC Monthly Oil Report. It shows the decline in production, then stagnation followed by recovery since the middle of 2023. This came after the White House allowed Chevron to develop its two joint ventures and ship the oil to the US. Later, when sanctions were eased, foreign companies were allowed to invest in the country. 

The News

Reuters: Venezuela Oil Sector Hit by Loss of Widest US License

Bloomberg: US to Reinstate Venezuela Sanctions, Says Maduro Broke Deal

Summary

The US has declined to renew a license allowing Venezuela to export oil and secure investment, which will likely affect Venezuela’s oil trade. The US is imposing stricter terms for oil transactions and will consider requests for individual US deals. Although sanctions relief has been partially withdrawn, oil exports to the US and Europe by companies like Chevron, Repsol, and Eni are still authorized.

EOA’s Main Takeaway

We have been telling our readers for a while that the Biden administration will not impose sanctions on Venezuelan oil. The Biden administration doesn’t want oil and gasoline prices to rise before the election. 

The news makes it sound like the White House did impose the oil sanctions. In reality, the decision has no impact on Venezuelan oil exports nor on US oil imports from Venezuela. There are several types of licenses and expectations, and the Biden administration just removed the latest one. All the oldest ones remain. The reimposition of sanctions on Venezuela is a trick like the administration’s messaging on the Russian price cap. The exemption that was revoked was a general exemption. Now individual companies can apply for an “exemption” and if they get it, it will be like the earlier exemption given to Chevron, ENI, and Repsol. It was a great political stunt!

There is no impact in the short run. Aside from the 45-day grace period for companies to wind down their operations, the reimposition has no impact on Venezuelan exports even after the 45 days. But some of the expected growth next year will not take place. 

Figure (2) below shows Venezuela’s exports for the last ten years. Exports were declining perpetually way before the sanctions were imposed. Sanctions made the situation worse.  Lifting the sanctions increased exports a little, but not much.