The United States will allow Venezuelan oil to be exported to Europe

According to a Bloomberg report on May 18, the Biden administration plans to ease sanctions on Venezuelan oil in order to allow more of the country's crude oil to enter Europe
.

The U.
S.
will allow European companies still operating in Venezuela to immediately transship more oil to the continent, while multinational energy company Chevron will be allowed to negotiate the resumption of operations at Venezuela's state-owned oil company (PDVSA), but will not be able to drill or export any Venezuelan-produced oil
, according to two senior U.
S.
administration officials.

The move was aimed at facilitating negotiations
between the Venezuelan government and the U.
S.
-backed Venezuelan opposition.
But it remains politically controversial, with some lawmakers arguing that the move would only bolster the regime
of current Venezuelan President Nicolas Maduro.

At the same time, the U.
S.
-backed Venezuelan opposition was reportedly in favor of the move, which affected the price of U.
S.
benchmark crude oil to fall
.

Italy's national hydrocarbons company Eni SpA and Repsol SA are reportedly Venezuela's only European oil producers, and the two companies are currently working
with the Biden administration.

Chevron's joint venture with PDVSA
.
Source: Associated Press

Chevron, a California-based multinational energy company, is the last major U.
S.
oil company
to do business in Venezuela.
The company first invested
in Venezuela in 1920.

In 2019, the company produced about 200,000 barrels of oil per day, but the U.
S.
government ordered it to cut production in 2020 and has since only approved the necessary work on oil wells to preserve its assets and employment levels
in Venezuela.

While Chevron is currently not allowed to drill or export oil from Venezuela, talks with PDVSA will give Chevron a new license to resume operations, which also suggests that Venezuelan oil could enter the United States
, according to people familiar with the matter.

Oil refinery
in Puerto Caverlo, Venezuela.
Source: Bloomberg

The Biden administration also removed former PDVSA treasurer Carlos Erick Malpica Flores from the sanctions list
, one of the people familiar with the matter said.

As global oil supplies tighten, crude oil and fuel costs soar, potentially worsening
inflation, the Associated Press reported on May 17.
Oil from Venezuela will help ease supply tensions and help Europe wean itself off its dependence on
Russian energy during the Russian-Ukrainian conflict.

Venezuela has the world's largest oil reserves, but political turmoil and economic recession in recent years have caused more than 6 million people to flee their homes, and about three-quarters of them live on less than $1.
90 a day, reaching international standards of
extreme poverty.