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.



Saudi Non-Oil Exports Hit Two-Year High

The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)
The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)
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Saudi Non-Oil Exports Hit Two-Year High

The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)
The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)

Saudi Arabia’s non-oil exports soared to a two-year high in May, reaching SAR 28.89 billion (USD 7.70 billion), marking an 8.2% year-on-year increase compared to May 2023.

On a monthly basis, non-oil exports surged by 26.93% from April.

This growth contributed to Saudi Arabia’s trade surplus, which recorded a year-on-year increase of 12.8%, reaching SAR 34.5 billion (USD 9.1 billion) in May, following 18 months of decline.

The enhancement of the non-oil private sector remains a key focus for Saudi Arabia as it continues its efforts to diversify its economy and reduce reliance on oil revenues.

In 2023, non-oil activities in Saudi Arabia contributed 50% to the country’s real GDP, the highest level ever recorded, according to the Ministry of Economy and Planning’s analysis of data from the General Authority for Statistics.

Saudi Finance Minister Mohammed Al-Jadaan emphasized at the “Future Investment Initiative” in October that the Kingdom is now prioritizing the development of the non-oil sector over GDP figures, in line with its Vision 2030 economic diversification plan.

A report by Moody’s highlighted Saudi Arabia’s extensive efforts to transform its economic structure, reduce dependency on oil, and boost non-oil sectors such as industry, tourism, and real estate.

The Saudi General Authority for Statistics’ monthly report on international trade noted a 5.8% growth in merchandise exports in May compared to the same period last year, driven by a 4.9% increase in oil exports, which totaled SAR 75.9 billion in May 2024.

The change reflects movements in global oil prices, while production levels remained steady at under 9 million barrels per day since the OPEC+ alliance began a voluntary reduction in crude supply to maintain prices. Production is set to gradually increase starting in early October.

On a monthly basis, merchandise exports rose by 3.3% from April to May, supported by a 26.9% increase in non-oil exports. This rise was bolstered by a surge in re-exports, which reached SAR 10.2 billion, the highest level for this category since 2017.

The share of oil exports in total exports declined to 72.4% in May from 73% in the same month last year.

Moreover, the value of re-exported goods increased by 33.9% during the same period.