The U.S. has ordered Chevron to cease its operations in Venezuela within a month, impacting revenue for the Maduro government. This decision follows a significant policy shift by former President Trump, who had momentarily engaged with Maduro but has since reverted to a hardline stance. Experts warn the cessation may worsen Venezuela’s economic crisis, potentially leading to increased emigration. Response to the announcement from oil markets and Chevron’s stock has been relatively muted, although Venezuelan revenue is set to decline significantly.
On Tuesday, the United States ordered Chevron to cease its operations in Venezuela within one month, delivering a significant setback to the financially strained government in Caracas. Currently, Chevron is responsible for producing and exporting nearly 250,000 barrels of crude oil daily, which generates essential revenue for Nicolás Maduro’s administration. Industry experts have described the 30-day deadline as an unrealistic expectation for Chevron.
This decision represents a considerable shift in former President Donald Trump’s approach towards Venezuela, a nation that has historically been an adversary of the U.S. During his first term, Trump enacted a policy of ‘maximum pressure,’ imposing sanctions and restricting operations of U.S. oil companies in the region. However, upon resuming office, Trump signaled a willingness to engage with Maduro, allowing a deal to facilitate the release of American citizens in exchange for the acceptance of migrant deportees.
This temporary diplomatic stance drew criticism from Florida Republicans who advocated for a focus on supporting pro-democracy movements allegedly undermined in Venezuela’s controversial elections. Following a challenging budget debate, Trump reversed his supportive position, asserting that Venezuela had failed to conduct fair elections and was not honoring the agreement.
Experts suggest that the cessation of Chevron’s operations may plunge Venezuela into a deeper recession and exacerbate the already critical outflow of citizens. The impact on Maduro’s government could be dire, resulting in a deficit of $150-200 million in foreign reserves monthly. Vice President Delcy Rodríguez has stated, “The new US government is trying to hurt the Venezuelan people. It’s a self-inflicted blow that is going to increase fuel prices.”
Despite this critical development, the oil markets appeared largely unaffected due to a recent OPEC decision to elevate production. Conversely, Chevron’s stock has declined approximately 2.8 percent over the past week. Venezuela’s oil output has drastically declined from 3.5 million barrels per day to just over one million, exacerbating the nation’s economic troubles, which saw an 80 percent GDP reduction between 2014 and 2021 due to low oil prices and stringent U.S. sanctions. Notably, European firms Eni, Repsol, and Shell have not been impacted by this directive, as they retain operations in Venezuela.
The U.S. decision to require Chevron to halt operations in Venezuela marks a significant policy change under former President Trump and poses severe ramifications for the Venezuelan economy. The associated loss of revenue may lead to increased hardship for the Venezuelan population while the reversal of engagement strategy indicates shifting political pressures within the U.S. Chevron’s unrealistically short timeline for cessation and the overall trajectory of Venezuela’s oil production highlight the complexities of the situation. The evolving landscape suggests potential increases in regional instability as Venezuela grapples with its economic crisis.
Original Source: www.france24.com
