Impending Crisis for Venezuela as Trump Threatens Chevron’s License

Experts warn that President Donald Trump’s threat to revoke Chevron’s license in Venezuela could deepen economic and social crises. Chevron, crucial for Venezuela’s oil production, resumed exports post-sanctions in 2022. Losing Chevron’s operations may lead to recession, increased inflation, and further migration, compounding Venezuela’s existing troubles while the US may face minimal changes in oil supply.

Caracas (AFP) – Experts warn that United States President Donald Trump’s potential revocation of Chevron’s operating license in Venezuela may lead the nation further into economic and social instability. Chevron is responsible for almost a quarter of Venezuela’s production, exporting around one million barrels of oil daily, vital for a country with the largest oil reserves globally.

Chevron had resumed oil exports to the US in 2022, following sanctions exemptions from Trump’s predecessor, Joe Biden, during an energy crisis exacerbated by the Ukraine conflict. President Nicolas Maduro’s assurances for fair elections have largely been seen as unfulfilled, which has impacted international relations, including with Trump.

The implications of losing Chevron’s operations are severe. Experts predict that halting these exports could lead Venezuela to experience a recession and exacerbate the outflow of its citizens, which has already reached approximately eight million. An estimated monthly loss of $150-200 million in foreign reserves is expected, further straining the economy.

Energy analyst Francisco Monaldi asserts, “the hit to cash flow will undoubtedly have macroeconomic impacts.” Economists have suggested that the country’s already dire situation could turn from modest growth to one marked by inflation and severe economic contraction.

Venezuela’s past reveals a dramatic downturn; from producing 3.5 million barrels per day in 2006 to just 400,000 barrels per day by 2020 amidst extensive sanctions. This drop coincided with a broader economic crisis that has significantly reduced GDP by 80% from 2014 to 2021.

For the United States, the impact on consumers is likely minimized, as imports from Canada and other suppliers can easily replace Venezuelan oil. Cuba, a close ally of Venezuela, may see benefits, regaining access to Venezuelan crude that had been diverted to preserve cash flow for domestic US needs.

It remains uncertain whether Trump’s actions can be reversed. His announcement about Chevron’s license revocation cites Venezuela’s slow repatriation of deported nationals, linking negotiations between the two countries. Monaldi speculates that opportunities for negotiation might exist, drawing parallels to previous diplomatic strategies employed by Trump with Colombia and Mexico.

In conclusion, the potential revocation of Chevron’s license by President Trump poses significant threats to Venezuela’s already fragile economy, potentially leading the country further into recession and increasing the migrant crisis. While the United States may experience little direct impact, Venezuela’s allies may gain access to its oil, and there are speculations about possible negotiations that could affect the future of these sanctions.

Original Source: www.france24.com