In anticipation of the looming deadline for U.S. sanctions relief on Venezuela’s crude industry, Rystad Energy has presented insights into the future trajectory of the nation’s oil output, with Senior Vice President Jorge León offering a comprehensive analysis.
With the deadline set for April 18, the prospects for Venezuela’s oil sector remain uncertain, Rystad Energy said.
León predicts that if the U.S. refrains from reinstating sanctions, Venezuela could see its oil production soar, potentially surpassing one million barrels per day (b/d) by December and reaching 1.12 million b/d by 2025. But if sanctions are reimposed, production is anticipated to plateau at around 890,000 b/d.
U.S. reimposes sanctions on Venezuela after opposition elections ban upheld | OilNOW
The decision on whether to reimpose sanctions is fraught with complexities. Initially partially lifted in exchange for the promise of transparent and internationally-monitored elections in 2024, doubts loom over the forthcoming elections’ credibility. The recent exclusion of leading opposition candidate Maria Corina Machado from the race, despite winning her party’s primary with an overwhelming majority, has raised concerns about the fairness of the electoral process.
Machado is Maduro’s main opponent and appears to be his biggest threat to re-election.
Venezuela’s Controller General, Elvis Amoroso had banned her from public office in June due to her support for U.S. sanctions against Maduro’s regime. Despite the ban, Machado continued her campaign and won the opposition primaries in October last. However, Venezuela’s top court suspended the primary results and ratified bans on her and other opposition candidates, after Venezuela’s attorney general Tarek William Saab said his office was investigating the primary and members of its organizing commission for electoral violations, financial crimes and conspiracy.
The potential ramifications of reimposing sanctions extend beyond the Venezuelan borders, according to the Rystad Energy Senior VP. He warned that further constraining the global oil market could drive prices to US$90 per barrel, worsening fuel costs for consumers, particularly with increased summer gasoline demand.
He said that presently, the likelihood leans towards maintaining lifted sanctions, albeit with potential cosmetic adjustments to appease political concerns.
“For instance, allowing crude sales in Venezuela’s national currency, the bolivar could offer a compromise that satisfies both political and economic imperatives. As the deadline approaches, the US faces a delicate balancing act between upholding democratic values, stabilizing global oil markets, and navigating domestic political dynamics,” León concluded.
