Effort to Boost Oil Production
Reuters reports U.S. Prepared to Authorize Chevron to Boost Venezuela’s Oil Output
Chevron Corp could soon win U.S. approval to expand operations in Venezuela and resume trading its oil once the Venezuelan government and its opposition resume political talks, four people familiar with the matter said on Wednesday.
U.S. officials this year sought to smooth a return to negotiations between socialist President Nicolas Maduro and the country’s opposition by offering a slight easing of sanctions and releasing some Venezuelans in U.S. jails.
“Cut the Corrupt Flow to China”
Here’s an amusing but economically illiterate idea.
The terms readied for approval will prevent Venezuela’s state-run oil firm PDVSA from receiving proceeds from Chevron’s oil sales. And they will cut “the use of corrupt shadow firms that control the flow of Venezuela oil to countries like China,” said a person familiar with the matter in Washington.
The administration wants Venezuela to increase production but does not want it going to China.
What a hoot.
Were it not for differences in oil grades and ability to process those grades it would not make a damn bit of difference where the oil went.
Regardless, the desire to exclude China is especially amusing because China is a willing buyer of Russian oil. It would be far more logical to hope all of the oil went to China.
Sanction Easing Rationale
After pleading with OPEC twice to produce more oil and failing twice, the US then turned to Venezuela.
The U.S. Treasury could issue a new license Monday or Tuesday. Expanded terms would not be a response to energy price concerns, but reflect a desire “to support the restoration of democracy in Venezuela,” one of the people said.
Translation: One of the people said this is “totally about energy concerns. Any other portrayal is a lie”.
Will This Lower the Price of Oil?
In isolation, yes.
However, it’s possible for OPEC to reduce supplies enough to counteract any increase in Venezuelan production.
Given US hoops and conditions and OPEC’s ability to counter supply increases that are likely to be modest, there may not be that big of an impact.
A Word About Sanctions
Trump placed sanctions on Venezuela hoping topple the regime of Nicolás Maduro.
Those sanctions worked as well a sanctions normally do which is to say not at all. Sanctions did not work in Russia, Iran, China, or Venezuela or anywhere else.
The only reason Biden is opening up to Venezuela is to get more oil.
The US sanctions hurt Venezuela badly. But mostly the sanctions hurt innocent citizens who suffer from food and medical shortages.
Starving innocent kids hoping to topple corrupt governments has never worked and never will.
So I am in favor of lifting the sanctions, totally and unilaterally, without all the lies and hypocrisy.
Let the oil flow and be done with it. That makes far more sense than absurd buyer’s cartel ideas.
For discussion, please see The Ridiculous Reality of the Russian Oil Price Cap Debate in One Picture
This post originated at MishTalk.Com.
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