The Biden administration will reimpose oil and gas sanctions on Venezuela after President Nicolas Maduro failed to comply with a US-backed agreement to allow free and fair elections this year.
Barring any last-minute concessions by Maduro, the US has made clear it is not likely to renew a six-month license that granted the OPEC member partial sanctions relief from October, following an election deal reached between the government and the Venezuelan opposition. It expires just after midnight EST (0400 GMT on Friday).
Washington had repeatedly threatened in recent months to reinstate punitive measures on Venezuela's vital oil and gas sector unless Maduro made good on his promises, including allowing the opposition to run the candidate of its choice against him in the July 28 election.
Maduro's government has complied with some of the terms of the deal, signed in Barbados. The Venezuelan President on Tuesday accused Washington of blackmail over sanctions.
The withdrawal of the most significant element of US sanctions relief would mark a major step back from US President Joe Biden's policy of re-engagement with the Maduro government.
But the Biden administration is expected to stop short of a full return to the “maximum pressure” campaign waged under former US President Donald Trump, according to people familiar with the matter.
Weighing on the US decision have been concerns about whether reimposing sanctions on Venezuela's energy sector could spur higher global oil prices and increase the flow of Venezuelan migrants to the US-Mexico border as Biden campaigns for reelection in November.
“We have made very clear that if Maduro and his representatives did not fully implement their agreements under the Barbados agreement, we would reimpose sanctions, and I would just say stay tuned,” US State Department spokesperson Matthew Miller told a daily briefing in Washington on Tuesday. He declined to elaborate.
Maduro's government has repeatedly reacted with defiance the Washington's warnings.
“International companies continue coming to Venezuela,” Venezuelan Oil Minister Pedro Tellechea said in Caracas. “With or without sanctions, Venezuela will be respected.”
Venezuela's oil exports in March rose to their highest level since early 2020 as customers rushed to complete purchases ahead of the possible return of sanctions, Reuters reported this month.
Deliberations on Sanctions Options
Deliberating on how far to go, Biden's aides had discussed a range of options ahead of the expiration of the US Treasury license that has allowed Venezuela to freely sell its crude, US sources said.
Among the steps they considered was allowing Venezuela to continue shipping oil but reimposing a ban on the use of US dollars in such transactions.
Failure to renew the current license would not rule out the possibility that the US could at some point issue a new version to replace it if Maduro starts to give ground on electoral commitments.
Without a general license, however, most foreign partners of Venezuela's state-run oil firm PDVSA may have no other option but to increase pressure for individual US authorizations, which they have been seeking for years.
The Biden administration initially re-engaged diplomatically with Maduro when the US was looking for ways to get more oil on world markets to offset the rise in crude prices from Western sanctions imposed on Russia over its 2022 invasion of Ukraine. Those contacts led to a deal for easing some of the harsh Trump-era sanctions on Caracas.
Earlier, a group of Republican US senators sent a letter to Biden urging his administration not to renew the license. “We must not cede American leverage by lifting US sanctions while the Maduro government deliberately disregards its obligations,” the senators said.
