The possible revocation of Chevron’s license to operate in Venezuela by President Trump could exacerbate the country’s economic and social crises. Chevron contributes significantly to Venezuela’s oil output, and losing this support would greatly impact the nation’s foreign reserves and economic stability. The U.S. might not face major disruptions from this change, but geopolitical ramifications could favor countries like Cuba. The outcome may depend on future negotiations between the U.S. and Venezuela’s government.
Caracas (AFP) – The potential revocation of Chevron’s permit to operate in Venezuela poses significant risks for the nation, according to analysts. If U.S. President Donald Trump proceeds with this threat, Venezuela, already suffering from economic and social challenges, could face exacerbated instability. Chevron’s operations are critical, contributing to around 25% of the country’s oil production, which is vital given Venezuela’s substantial oil reserves.
Chevron resumed its exports to the U.S. in 2022 after a sanctions exemption from President Joe Biden, coinciding with a global energy crisis ignited by Russia’s invasion of Ukraine. President Nicolás Maduro had assured fair elections, a commitment that many believe he has failed to uphold, including Trump.
Should Trump’s administration revoke Chevron’s operating license, experts warn of severe economic consequences—potentially driving the country into recession and increasing emigration. Foreign reserves would diminish by approximately $150-200 million each month, worsening Venezuela’s economic landscape, which has already seen an 80% decline in GDP since 2014 due to low oil prices and stringent U.S. sanctions.
With Trump’s policies fueled by a ‘maximum pressure’ approach, Venezuelan oil production decreased drastically, hitting a historic low of only 400,000 barrels per day in 2020. During peak production in 2006, the country exported 3.5 million barrels daily, a sharp contrast to current figures. The ongoing turmoil has compelled nearly one-quarter of the Venezuelan populace to flee, seeking better opportunities abroad.
From the U.S. perspective, Jorge Rene Pinon from the University of Texas’s Energy Institute posits that U.S. consumers are unlikely to feel a significant impact, as alternative sources such as Canada can readily fill any gaps left by Venezuelan oil. Notably, Cuba, a key ally of Venezuela, could benefit from any surplus production aimed to bolster its economic position amid ongoing sanctions.
While previous sanctions allowed Venezuela to redirect its exports to countries like China and India, the future remains uncertain without Chevron’s support. Energy analyst Rachel Ziemba notes the ambiguity surrounding the status of specific licenses, while Chevron’s recent renewal remains valid until August 1, providing opportunity for negotiations with the Trump administration.
Trump has tied the potential revocation of Chevron’s license with his intentions regarding the deportation of Venezuelan nationals from the U.S., suggesting that negotiations may yield a different outcome. Observers believe that similar to his strategies with Colombia and Mexico, the pressure from the U.S. might compel Maduro’s administration to comply with demands.
The situation surrounding Chevron’s operations in Venezuela reflects a complex interplay of geopolitical interests and domestic challenges. The potential revocation of its operating license threatens to deepen the nation’s economic woes and increase emigration, while the U.S. may look to alternative suppliers for oil. Future negotiations could play a pivotal role in shaping Venezuela’s engagement with the global oil market and its political landscape.
Original Source: www.france24.com
