The potential revocation of Chevron’s license by Donald Trump could worsen Venezuela’s economic crisis, leading to recession and increased emigration. The loss of Chevron, which accounts for a substantial part of the country’s oil production, could significantly impact Venezuela’s foreign reserves. Meanwhile, U.S. consumers may not experience direct effects, as alternative sources could replace Venezuelan oil, while Cuba stands to gain from increased crude supply.

The potential revocation of Chevron’s license to operate in Venezuela by former President Donald Trump poses significant risks to the South American nation, which is already grappling with economic and social issues. Chevron produces nearly a quarter of Venezuela’s oil, amounting to approximately a million barrels per day, vital for the country’s economy, given it possesses the world’s largest oil reserves. After a previous sanctions exemption under the Biden administration, Chevron had resumed exports to the U.S. in 2022, a decision that coincided with President Maduro’s commitment to fair elections, a promise many view as unfulfilled.

Experts predict that stripping Chevron of its operational license could lead to severe economic repercussions for Venezuela, potentially deepening recession and exacerbating emigration, with estimates suggesting that 150 to 200 million dollars in foreign reserves could be lost monthly. Francisco Monaldi, an energy expert at Rice University, emphasized that the resulting cash flow reduction would have significant macroeconomic effects, foreseeing a shift in Venezuela’s growth forecast towards recession and high inflation. The country’s GDP had already dramatically declined by 80 percent between 2014 and 2021, influenced by low oil prices and stringent U.S. sanctions.

For the United States, the anticipated discontinuation of Venezuelan oil imports may not substantially affect consumers, as markets could replace these imports with oil from Canada and other sources. Additionally, Cuba, a close ally of Venezuela, could benefit as the volumes of crude supplied from Venezuela may increase, recovering from historical lows in recent deliveries. Venezuelan oil had previously found its way to substantial economies like China and India under previous sanctions, but with Chevron potentially sidelined, the capacity of PDVSA, the national oil company, to sustain production remains uncertain.

Uncertainty looms over the specifics of any canceled licenses and possible replacements. Chevron’s license was renewed recently and is valid until August 1, which may present a brief opportunity for negotiation with the Trump administration concerning its future operations in Venezuela. Trump has indicated that his decision is related to the rapid return of Venezuelan nationals, suggesting potential leverage to prompt a different response from Maduro. Energy analyst Rachel Ziemba notes that this scenario could align with previous negotiations Trump conducted with Colombia and Mexico.

The threat to Chevron’s operating license poses both immediate economic challenges for Venezuela and broader geopolitical implications. Experts highlight that the loss of Chevron’s oil production could trigger recession and increased migration, further destabilizing the nation. Conversely, the U.S. market may securely replace Venezuelan oil, while Cuba could benefit from increased supplies. Negotiations regarding operations may still be possible within the remaining timeframe of the license, and Trump’s actions may influence Venezuelan leadership responses.

Original Source: www.deltanews.tv

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