US President Donald Trump’s threat to revoke Chevron’s oil license in Venezuela could further destabilize the already troubled nation, leading to economic decline and increased emigration. Chevron contributes significantly to Venezuela’s oil exports, and losing its operations would worsen the economic crisis, while the United States and rival countries could adjust to these changes. Negotiations may still occur, linking oil operations to immigration policies.

The recent threat by US President Donald Trump to revoke Chevron’s operating license in Venezuela poses significant risks to the nation’s already troubled economy, according to experts. Chevron plays a crucial role, producing about a quarter of Venezuela’s oil output, and its loss could worsen the current economic crisis, pushing more citizens to flee the country in search of better conditions.

Currently, Chevron exports nearly 250,000 barrels per day from Venezuela, benefitting from a sanctions exemption previously granted by President Joe Biden. This export resumption occurred amid a global energy crisis exacerbated by Russia’s invasion of Ukraine, and closely followed President Nicolas Maduro’s promise for fair elections—an assurance many believe he has since violated.

Experts warn that a loss of Chevron’s exports may lead Venezuela into a recession, drastically reducing foreign reserves by an estimated $150 to $200 million monthly. Francisco Monaldi, an energy expert from Rice University, noted that the decrease in cash flow would likely have severe macroeconomic repercussions. Likewise, economist Leonardo Vera from the Central University of Venezuela cautioned that a previously anticipated modest growth could devolve into a severe recession and inflation.

Over the years, the mismanagement and sanctions have caused Venezuela’s GDP to plummet by 80% from 2014 to 2021. Under Trump’s prior administration, oil production dropped to four-decade lows of 400,000 barrels daily, a stark contrast to the 3.5 million barrels produced in 2006 when the U.S. was a primary client. This economic disruption has forced approximately eight million Venezuelans—nearly a quarter of the population—to flee the country.

From the United States’ perspective, experts suggest there will be minimal impact on consumers, as imports from Venezuela can easily be replaced with supplies from Canada or other countries. However, Cuba, an ally of Venezuela under U.S. sanctions, could see increased benefits as Venezuelan crude deliveries to the island had dwindled significantly, hence making way for reinvigorated exports.

Under previous sanctions, Venezuela had redirected its sales to economies like China and India, albeit at lower pricing. Yet, with Chevron’s potential exit, it remains uncertain whether the state oil company PDVSA can maintain the current production levels independently. Energy analyst Rachel Ziemba emphasized the ambiguity surrounding the cancellation of Chevron’s licenses and possible negotiations to replace them, as the existing license is effective till August 1.

President Trump indicated that his actions are also tied to his commitment to deport around 600,000 Venezuelans from the U.S., relating these sanctions to Caracas’s slow response to repatriate its citizens. Monaldi expressed hopes for negotiations, drawing comparisons to Trump’s dealings with Colombia and Mexico, wherein similar pressure yielded favorable outcomes for U.S. interests.

The potential revocation of Chevron’s license to operate in Venezuela poses profound threats to the nation’s economy and social stability. With possibilities of recession and further emigration on the horizon, the geopolitical dynamics between Venezuela and the United States remain fraught with negotiation potential. Experts indicate that while immediate implications for U.S. consumers may be minimal, regional allies such as Cuba could benefit from any shift in Venezuelan oil exports, emphasizing a complex international landscape shaped by sanctions and political maneuvering.

Original Source: www.france24.com

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