Former President Trump’s ban on Chevron’s operations in Venezuela has caused oil prices to rise slightly while Chevron’s stock fell by 0.8%. The decision, rooted in political concerns, significantly impacts Venezuela’s oil output and economic stability. It marks a notable shift in U.S. energy policy and sparks strong reactions from Venezuelan officials and market analysts, highlighting the importance of U.S. oil supply dynamics.
The recent ban on Chevron’s operations in Venezuela by former President Donald Trump has caused significant fluctuations in oil prices, resulting in a slight increase in crude prices while causing Chevron’s stock to decline by 0.8%. This move followed Trump’s announcement that revoked Chevron’s operating license due to Venezuela’s lack of progress on electoral reforms and insufficient migrant returns, affecting approximately 240,000 barrels per day, which is a substantial portion of the nation’s oil output.
Following the license revocation, Brent crude futures rose to around $72.55 per barrel, and West Texas Intermediate futures increased to $68.68 per barrel. Market analysts, including Hiroyuki Kikukawa from NS Trading, noted that the news prompted a market unwinding after a recent sell-off amid ongoing ceasefire discussions between Russia and Ukraine. This policy shift comes after oil benchmarks experienced two-month lows, losing around 5% earlier in the month.
In response, Venezuelan officials expressed strong disapproval of the termination of Chevron’s license, with Vice President Delcy Rodriguez describing it as “a damaging and inexplicable decision” that has worsened migration issues. The economic impact has been considerable, as Chevron’s operations contribute an estimated $2.1 to $3.2 billion in annual government revenue through taxes and royalties, according to consultancy Aurora Macro Strategies.
This policy reversal marks a departure from the Biden administration’s stance. Secretary of State Marco Rubio indicated intentions to dismantle former licenses supporting the Maduro regime. Despite market reactions, U.S. Energy Secretary Chris Wright assured that the U.S. would remain resilient against minor global supply interruptions due to its status as the world’s leading oil producer.
Goldman Sachs has reaffirmed its price forecast for Brent crude between $70 and $85 per barrel, predicting strong growth in U.S. oil supply despite the recent developments. The license termination will officially take effect on March 1, creating uncertainty regarding the fate of Venezuelan crude shipments destined for U.S. ports.
Opposition leader Maria Corina Machado publicly supported Trump’s decision, asserting that it benefits both the Venezuelan population and the broader goals of democracy and prosperity. Chevron faced a challenging environment as it seeks to recover approximately $3 billion owed by Venezuela, with plans to reclaim around $1.7 billion by 2024 amidst these new policy dynamics.
The Trump administration’s Chevron ban in Venezuela has resulted in oil price fluctuations and declining stock performance for Chevron. The revocation of the operating license has sparked strong reactions from Venezuelan officials and raised concerns about economic impacts. Amid shifts in U.S. foreign policy, the future of oil supply from Venezuela remains uncertain, while Goldman Sachs maintains optimistic forecasts for Brent crude prices.
Original Source: watcher.guru
