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U.S. Government Extends Transaction License With Venezuelan Oil Firm PDVSA

U.S. Government Extends Transaction License With Venezuelan Oil Firm PDVSA

May 10, 2024

U.S. Government Extends Transaction License With Venezuelan Oil Firm PDVSA

The United States Treasury Department has announced an extension of a general license that permits certain transactions with Venezuela’s state oil company, Petróleos de Venezuela, S.A. (PDVSA), required for winding down operations. The extension, valid through November 15, is significant for the oil industry's major players, including Halliburton, Schlumberger, Baker Hughes Holdings, and Weatherford International PLC.

The move comes against the backdrop of ongoing political tensions and economic difficulties in Venezuela. The geopolitical climate has had a pronounced effect on the global energy market, evidenced by recent contract cancellations from entities such as the Polish refiner Orlen.

Despite the sanctions, Venezuela has shown a willingness to engage in dialogue with major international actors. Notably, China, as Venezuela's largest creditor, maintains an open line of communication with the country. Venezuelan President Nicolas Maduro stated earlier this week the nation's intention to honor its debt obligations to China.

In recent developments, crude oil prices were subject to fluctuations following the news that the U.S. would reinstate oil sanctions on Venezuela after a six-month hiatus starting May 31. Nevertheless, the potential rise in oil prices was moderated by an increase in U.S. crude oil stockpiles. The newly extended license will provide a buffer until November, during which time wind-down transactions can continue.

In November last year, Venezuelan Oil Ministry officials reported that the country’s crude oil production had climbed to 850,000 barrels per day (bpd), a modest improvement from the 786,000 bpd recorded in October. Despite claims by oil ministry officials of ongoing recovery within the industry, the respite offered by the pause in sanctions provided only a brief opportunity for traders to engage with the Venezuelan crude market, an opening that is set to close once more.

Treasury Department Notice

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