With the US resuming its oil operations in Venezuela, this article aims to understand the reasons, aftermath, and geopolitics of the US easing sanctions on Venezuelan Oil.
Venezuela, a country situated in the northern part of Latin America on the shades of the Andes and which holds the world’s largest reserves of oil, is known for its economic and political instability. It shares an unwelcome relationship with Washington with a history of differences with various regimes of Venezuela, including the incumbent one. But the relations took an interesting turn as the United States decided to resume its oil operations in Venezuela recently.
The United States has also said that it would look to reduce the sanctions imposed on Venezuela and has also stated that this move won’t change its stance toward Caracas. They have also reaffirmed that the United States holds unilateral rights regarding oil operations and that changes can be made at any given time. The oil company Chevron also needs to continue to submit the operation details to Washington so as to maintain transparency in its dealings with Venezuela.
The USA’s Oil Dilemma
Since February 24, when the crisis in East Europe emerged, it has brought not only a geopolitical problem but also the geo-economic one as western countries, mostly from Europe and Atlantic states, who were dependent on Russian oil and gas suffered immensely as Moscow reduced its export to them amid their sanctions imposed on it simultaneously. President Biden in the early days of the war announced that the U.S. will stop all imports of oil and gas from Russia. This led to energy deficiency in Europe and the United States, which led to an attempt by them to negotiate with countries that can be an alternative to Russian oil. The first countries on the list were Venezuela, Iran, Algeria, and Qatar.
But the west was further disappointed as Maduro-led Venzeula specifically mentioned it would export oil to the west, particularly the United States, only if they recognised Nicholas Maduro as the president of Venezuela and not Juan Guaidó. It also demanded the lifting of sanctions imposed on it by the Weast. The United States, led by the West, tried to negotiate with Caracas, but nothing was achieved and the talks ended. Since the U.S. has imposed sanctions on Iran, the West cannot expect any oil from it. Further, the JCPOA talks got derailed as both Iran and the West were not ready to negotiate. The war in Europe also sidelined the JCPOA talks.
Further aggravating the oil crisis for the West, especially Europe is Algeria’s dispute with Spain over the latter change in stance over Western Sahara. Spain recently changed its stance towards Morocco and signed various agreements with them, further sidelining Algeria. Spain began sending natural gas supplies to Morocco through the Maghreb-Europe gas pipeline (GME). Consequently, Algeria threatened Spain stating if gas from them were to be diverted to a third destination, it would immediately suspend its natural gas supplies to Spain. This tug-of-war has major consequences for Europe and its gas supplies.
Qatar is also not in the mood to increase its supplies to the West and is not ready to toe the West’s stance on Russia. Qatar’s reluctance to play second fiddle to the demands of the West has in effect closed the doors for more Arab oil to the West.
The Crisis in Venezuela
Venezuela’s own internal corruption and lack of political will in the past have hindered its progress. There have been several reports of corruption in their oil export dealings and even without sanctions their record of oil exports has not been good due to poor governance, lack of infrastructure and corruption, which have depleted the country’s resources. Nicholas Maduro, who seems to be determined to solve the country’s crisis, made one more attempt recently. On November 26, 2022, Maduro said his government would coordinate and sign an agreement with the opposition to unblock funds to help the country tackle its economic woes.
Moreover, there has been no recognition from the US for the present political dispensation. The US doesn’t recognise Venezuelan President Nicolas Maduro as a president and has recognised Juan Guaidó as the de facto president because the US has charged Nicolas Maduro with the persecution of Americans. Continuing sanctions on the Andean country means that oil exports from Venezuela will be blocked from reaching the international markets. This has added to the huge oil crises for the West but has resulted in skyrocketing inflation in Venezuela which has in turn increased the cost of living and added to Maduro’s woes.
The USA’s ‘Venezeula card’
There are several geopolitical reasons for the US to resume oil operations in Venezuela. Venezuela and Iran have been arch-rivals of Washington just like Moscow or Beijing. Tehran is in search of parties who are anti-U.S. One such destination is Venezuela, as the premier of the country blames Washington for its woes. Venezuela is geographically close to the U.S. and would help rivals of the U.S. to get access and visibility. The growing Iran and Venezuela relationship is a concern for the US. This is also interesting as these two countries have huge oil reserves but both are under US sanctions and are suffering huge losses as a consequence.
President Maduro visited Tehran in June this year where both countries signed a 20-year cooperation agreement and MOUs in various sectors such as agriculture, security and more. This visit was an indicator of the growing ties between these two countries and there is a lot that can be analysed. As Maduro looks to mend ties with countries that are anti-West, which not only strengthens his stance against the United States but also allows him to form alliances with resourceful nations to bypass the regulations set by Washington.
For Iran, the visit was a usual anti-US exercise as it would always welcome countries with potential that are anti-West. It was also an ambitious attempt by Iran to emerge out of the shadows of Asia and flex its muscles to reach globally. Moreover, Venezuela was also in the spotlight when the External Affairs Minister of India Dr S Jaishanar voiced support for Venezuelan oil on the sidelines of the Bratislava dialogue.
Lessons for Venezuela
There are specific indicators and lessons that Caracas can take to address its domestic woes and turn its potential into reality but utilising the present global situation of energy insecurities. The path won’t be easy for the South American country.
Apart from its domestic crisis, Venezuela will also be subjected to the vagaries of global issues such as the risk of recession, and energy and food insecurities affecting a large part of the world due to the crises in Ukraine. It certainly won’t be for Venezuela to sail through the crises. But this is also an opportunity that can definitely help Maduro lead Venezuela out of the present impasse.
(The author is a post-graduate student in International Relations at Kalinga university, Raipur. The opinions expressed are the author’s own)
Balaji Subramanian 
Dr. Niranjan B Poojar