Venezuela Oil Sector Hit Hard as US Reimposes Sanctions Over South American Country's Election Fairness

The consequences of Nicolas Maduro's constant repression campaign in Venezuela have begun as Venezuelan oil took a massive hit after the US reimposed energy sanctions against it over Maduro breaking his promise to be free and fair during the upcoming July 28 election.

The sanctions being reimposed meant that Venezuela lost a key US license that allowed it to freely export and increase investment in its oil sector. This will lead to the country's quality of its crude and fuel sales taking a hit while also prompting a flurry of requests for individual authorizations from the US.

The US previously eased sanctions against Venezuela when the country's leadership agreed to conduct free and fair elections. The deal included Venezuela agreeing to let politicians who were previously barred from holding office to run, most notably former legislator Maria Corina Machado.

However, the Venezuela Supreme Court, which is filled with Maduro allies, upheld the ban against her. Meanwhile, his attorney general arrested several key opposition members, including some of Machado's election staff and members of the media, over an alleged plot to assassinate Maduro.

As a result, the United States is not renewing Oil License 44, which eased oil sanctions in the country last October. Several oil supertankers chartered by customers of state company Petroleos de Venezuela, or PDVSA (PDVSA.UL) will now depart the country, though others may need individual US authorizations to complete their purchases.

Venezuelan Foreign Minister Yvan Gil claimed that the sanctions had little effect and would not harm Venezuela and added that "Venezuela's recent prosperity was due not to license 44 but to Maduro's astute economic management."

Despite this, Reuters reported that PDVSA's finances will take a hit as its access to hard currency needed for affording everything from labor to procurement will become limited thanks to the sanctions returning.

Oil Prices at 3-Week Low Despite US Sanctions on Venezuela, Middle East Tensions

Many were expecting oil prices to rise after the US reimposed sanctions against Venezuela, as well as the ongoing tensions in the Middle East. However, Reuters reported that oil prices actually reached a 3-week low, with Brent futures falling 18 cents, or 0.2%, to settle at $87.11 a barrel. Meanwhile, West Texas Intermediate (WTI) crude rose 4 cents, or 0.1%, to settle at $82.73.

It was described as the lowest close for Brent since March 27, and this happened for the second day in a row, Meanwhile, WTI also closed at its lowest since March 27. This has been attributed to an "increased interest in energy trading."

How Much Venezuelan Oil Reached the US When Sanctions Were Eased?

When the US eased sanctions against Venezuela after it promised "free and fair" elections, the South American country was able to export 600,000 barrels per day (bpd) during the first quarter. Of that amount, 165,000 bpd were destined for the United States, according to CNBC.

It was reported that this amount was only moderate and the impact of the US losing this much oil was described to be "minimal."

This article is owned by Latin Post.

Written by: Rick Martin

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