The U.S. has given Chevron one month to halt operations in Venezuela, a critical source of revenue for the Maduro government. This marks a dramatic shift in Trump’s approach to Venezuela, moving from engagement back to economic sanctions. Analysts warn that this could lead to significant economic decline for Venezuela, resulting in increased hardships for its citizens.
The United States has mandated that Chevron cease its operations in Venezuela within a month, imposing a significant challenge on the financially distressed authorities in Caracas. Currently, Chevron is responsible for producing and exporting nearly a quarter of the daily crude oil output from Venezuela, which is crucial for financing President Nicolas Maduro’s regime.
The Treasury Department’s announcement requires Chevron to halt its oil production within a 30-day window, a stipulation industry experts are calling impractical. This decision reflects a sharp pivot in former President Donald Trump’s stance on Venezuela, a country that has long been at odds with the United States. Previously, during his initial term, Trump adopted a “maximum pressure” strategy against Maduro’s administration, entailing extensive sanctions and restrictions on U.S. oil companies.
Upon resuming office, Trump unexpectedly attempted engagement with Maduro, endorsing an agreement for the release of U.S. citizens in exchange for accepting the deportation of migrants to Venezuela. His envoy even took photographs with Maduro in Caracas, igniting backlash from Florida Republicans advocating for support of pro-democracy groups in Venezuela. However, following a challenging budget vote in Congress, Trump expressed dissatisfaction with Venezuela for not adhering to fair electoral practices, prompting a rapid reversal of his earlier engagement strategy.
Analysts warn that Chevron’s withdrawal could lead Venezuela into an economic recession, further exacerbating the exodus of its citizens. For Maduro, the loss of Chevron’s exports would severely deplete the already fragile foreign reserves, which could result in a deficit of approximately $150-200 million monthly. Venezuelan Vice President Delcy Rodriguez criticized the U.S. government, asserting, “The new US government is trying to hurt the Venezuelan people. It is a self-inflicted blow that will increase fuel prices.”
The oil markets appeared unfazed by the announcement, coinciding with OPEC’s decision to ramp up production. Nevertheless, Chevron’s stock has experienced a decline of roughly 2.8 percent over the past week. Once producing 3.5 million barrels per day, Venezuela’s output has dwindled to just over one million barrels, despite possessing the largest oil reserves globally. From 2014 to 2021, Venezuelan GDP plummeted by 80 percent due to low oil prices and stringent U.S. sanctions. Notably, European firms such as Eni, Repsol, and Shell remain unaffected by this new directive.
The United States has placed a stringent deadline on Chevron to cease its operations in Venezuela, marking a significant shift in the Trump administration’s approach toward Maduro’s regime. This decision could have dire economic repercussions for Venezuela, potentially deepening the country’s recession and exacerbating the humanitarian crisis. Observers note this move is part of a broader political strategy amid increasing pressure from U.S. legislators and reflects a return to a more aggressive stance against the Venezuelan government.
Original Source: www.rnz.co.nz
