The U.S. Treasury has halted Chevron’s operations in Venezuela, cutting off vital oil supplies as it aligns with Trump’s policy reversal of Biden’s concessions to Maduro. This change impacts approximately 20% of Venezuela’s oil production, raising concerns among U.S. refiners about sourcing heavy crude amidst expected market volatility.
The U.S. Treasury Department has issued an immediate 30-day termination notice to Chevron Corporation, effectively halting its operations in Venezuela. This decision aligns with former President Donald Trump’s commitment to reverse President Joe Biden’s oil concessions to Nicolás Maduro. Chevron, accounting for about 20% of Venezuela’s oil output, has been a vital entity for the nation’s economy, generating approximately $6 billion to support its stability amidst ongoing crises.
Under the Biden administration, Chevron was permitted to export 240,000 barrels of Venezuelan crude daily to United States refiners, crucial for processing heavier oil grades. However, with Trump’s recent policy change, these shipments will cease by April 3, 2024, prompting immediate market reactions with Chevron’s stock price decreasing by 1.3%, while both WTI and Brent crude prices experienced declines.
Republican lawmakers in Florida have been outspoken against U.S. engagement with Venezuela, arguing that it strengthens Maduro’s regime. Trump echoed this sentiment by stating his intention to “reverse the concessions Crooked Joe Biden gave to Nicolás Maduro.” Secretary of State Marco Rubio has similarly pledged to eliminate Biden-era oil and gas licenses that have inadvertently funded the Maduro administration.
In response to the U.S. decision, Venezuelan officials condemned the move as “harmful,” arguing it will negatively impact U.S. interests and its populace. The absence of Chevron is likely to push Venezuela back to clandestine oil dealings with nations such as Iran and China, reminiscent of previous periods of covert operations involving “ghost tankers.”
The broader implications of this shift raise pressing questions about the future sourcing of heavy crude for U.S. refineries, as they will need to find alternatives moving forward, along with potential fluctuations in price following Chevron’s exit.
In summary, the U.S. Treasury’s notice to Chevron marks a significant pivot in energy policy, cutting off a crucial oil supply from Venezuela. This action symbolizes a return to stricter sanctions aimed at weakening Maduro’s regime while raising concerns about the implications for U.S. refineries reliant on heavy crude. As Chevron exits, the questions of alternative sourcing and market ramifications remain pivotal.
Original Source: oilprice.com
