U.S. Gives Chevron Green Light to Return to Venezuela

The Trump administration granted Chevron a sanction exemption for its operations in Venezuela but only on the condition that no money from these operations would go to the Venezuelan government, Reuters reports, citing unnamed sources in the know.

A week ago, Reuters reported that the U.S. government was considering a reversal of its earlier decision to force Chevron out of Venezuela amid a new sanction push against the Maduro government.

Chevron was cautious in its reaction to the report. “Chevron conducts its business globally in compliance with laws and regulations applicable to its business, as well as the sanctions frameworks provided for by the U.S. government, including in Venezuela,” the company said last week in reaction to the news it could be allowed to return to Venezuela, where it produced some 240,000 barrels of oil daily.

Amid these reports, ING predicted that Venezuelan supply of crude oil would return gradually over the second half of the year. TradeWinds forecast a rebound in demand for Aframax and Suezmax tankers following the Trump administration’s decision.

Kpler, for its part, noted in a commentary that the exemption granted to Chevron would result in a price correction for heavy crude grades. The data analytics provider said that the exemption was “expected to help cool the heat in the heavy crude market — albeit arriving somewhat late, as the peak summer demand season is nearing its end.”

“Nevertheless, it introduces upside risk to global supply just as the market is on the brink of shifting into oversupply by late Q3,” Kpler senior crude oil analyst Muyu Xu also said.

The U.S. was importing Venezuelan crude at a peak rate of some 300,000 barrels daily last year and early this year, Kpler recalls, adding that the average import rate was about the same as Chevron’s portion of joint output in the county for last year.

By Irina Slav for Oilprice.com

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