US to Reimpose Oil Sanctions on Venezuela

FILE PHOTO: El Palito refinery of the Venezuelan state oil company PDVSA is seen, in Puerto Cabello, Venezuela February 10, 2024. REUTERS/Leonardo Fernandez Viloria/File Photo
FILE PHOTO: El Palito refinery of the Venezuelan state oil company PDVSA is seen, in Puerto Cabello, Venezuela February 10, 2024. REUTERS/Leonardo Fernandez Viloria/File Photo
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US to Reimpose Oil Sanctions on Venezuela

FILE PHOTO: El Palito refinery of the Venezuelan state oil company PDVSA is seen, in Puerto Cabello, Venezuela February 10, 2024. REUTERS/Leonardo Fernandez Viloria/File Photo
FILE PHOTO: El Palito refinery of the Venezuelan state oil company PDVSA is seen, in Puerto Cabello, Venezuela February 10, 2024. REUTERS/Leonardo Fernandez Viloria/File Photo

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.



Gold Set for Weekly Drop; Traders Await US Inflation Data

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
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Gold Set for Weekly Drop; Traders Await US Inflation Data

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo

Gold prices rose on Friday, but were set for a weekly decline after the Federal Reserve signalled a slowdown in rate cuts next year, while focus shifted to a key US inflation print due later in the day.
Spot gold was up 0.5% at $2,606.19 per ounce, as of 0821 GMT, but has lost about 1.5% so far this week.
US gold futures was 0.5% higher at $2,620.60, Reuters said.
Gold is consolidating as "investors await Trump to resume office next year and the Fed will also go meeting by meeting, considering the data development and seeing what is part of Trump's trade policy," said Soni Kumari, a commodity strategist at ANZ.
Investors now await the core Personal Consumption Expenditures (PCE) data, the Fed's preferred inflation measure, for further clues on the US economic outlook.
The Fed cut rates by 25 basis points on Wednesday, but the cautious note struck in its economic projections and expected slowdown of rate cuts pushed gold to its lowest level since Nov. 18.
Data showed on Thursday that the US economy grew faster than expected in the third quarter, while jobless claims also slipped more than anticipated, reinforcing expectations that the central bank will take a cautious approach to policy easing.
A slightly more hawkish set of the Fed's regional bank presidents will become voters on its rate-setting panel in 2025, raising the chance that any further rate cuts next year could spur more dissents like the one seen from the head of the Cleveland Fed.
Higher rates dull the appeal of the non-yielding asset.
According to Reuters technical analyst Wang Tao, spot gold may retest support at $2,582 per ounce.
Spot silver gained 0.1% to $29.06 per ounce but was headed for its worst week since April.
Platinum dropped 0.2% at $921.50 and palladium rose 0.5% to $910.63. Both the metals were poised for weekly losses.