US President Trump’s threat to revoke Chevron’s license in Venezuela risks plunging the country into deeper economic distress. Experts warn about losing crucial oil revenue, leading to recession and increased migration. While US consumers may not feel immediate effects, Cuba could benefit from the change in oil supply dynamics. Uncertainty looms around negotiations with the Trump administration, which may impact Venezuelan national repatriation efforts in exchange for maintaining Chevron’s operations.
The potential revocation of Chevron’s operating license in Venezuela by US President Donald Trump poses significant risks for the already ailing South American nation. Chevron is responsible for around 25% of Venezuela’s daily oil production—vital for a country rich in oil resources but suffering from severe economic challenges. The company had resumed exports to the US in 2022 due to an exemption from sanctions imposed by Trump’s predecessor, President Joe Biden, amidst an energy crisis linked to geopolitical tensions.
Trump’s suggestion to strip Chevron of its operating license could drive Venezuela deeper into recession and lead to increased emigration. Experts fear this would lead to a loss of approximately $150-200 million monthly in foreign reserves, exacerbating the nation’s ongoing financial woes. Energy expert Francisco Monaldi has indicated that such a financial blow would have considerable macroeconomic consequences for the country.
The absence of Chevron’s operations could turn a previously anticipated modest economic growth into a recession accompanied by high inflation, according to economist Leonardo Vera. Historically, Venezuela has experienced dramatic declines in GDP, showcasing its vulnerability to fluctuations in oil pricing and extrinsic sanctions. Between 2014 and 2021, the GDP plummeted by 80% as production hit historic lows under previous sanctions.
From the US perspective, there may be limited immediate effects on consumers, as imports from alternative sources are readily available. Moreover, Cuba might gain from this evolving situation, receiving more Venezuelan crude that would have otherwise been directed to the US. Venezuela’s ability to manage oil exports could shift, but markets such as China and India may still emerge as viable partners despite lower pricing.
The future of Chevron’s license remains uncertain, with its most recent renewal set to expire on August 1. This time frame offers opportunities for diplomatic negotiations between Trump and the Venezuelan government. Trump’s position links the license’s status to the repatriation of Venezuelan nationals from the US. Analysts suggest that these developments might pave the way for potential concessions from Maduro’s regime in order to maintain oil exports and mitigate diplomatic strife.
The precarious situation in Venezuela could escalate if Chevron’s operating license is revoked by the Trump administration. This move might result in dire economic impacts for the nation, further exacerbating inflation and leading to an increased exodus of Venezuelans. Although alternatives exist for US oil imports and Cuba could benefit from a shift in crude supply, the overall situation remains troubling for both Venezuela and its government, creating a complex network of diplomatic relations that could influence future oil exports.
Original Source: www.france24.com
