Worries about Venezuela filling-in for Russian oil
By Austin Ramzy
President Nicolás Maduro of Venezuela signaled on Monday a willingness to increase his country’s oil production if Russian supplies are shut out of the international market, as he described a meeting with U.S. officials over the weekend as “respectful, cordial, very diplomatic.”
Venezuela, a Russian ally whose oil industry is under American sanctions, has emerged as a possible replacement for some of the crude supplies that could be banned as the United States increases its effort to punish the Russian economy. U.S. officials are reportedly looking at easing the sanctions to allow Venezuelan oil back onto global markets and address rapidly rising crude prices.
But such efforts face a host of obstacles. Some members of Congress have been sharply critical of any effort to rekindle ties with Venezuela, saying that efforts to isolate President Vladimir V. Putin of Russia should not boost other authoritarian leaders.
“The White House offered to abandon those seeking freedom from Venezuela in exchange for an insignificant amount of oil,” Sen. Marco Rubio, R-Fla., said in a tweet.
Sen. Robert Menendez of New Jersey, a Democrat, said in a statement that resuming oil trade with Venezuela “risks perpetuating a humanitarian crisis that has destabilized Latin America and the Caribbean for an entire generation.” He called Maduro “a cancer to our hemisphere and we should not breathe new life into his reign of torture and murder.”
The United States has accused Maduro of electoral fraud, and the Trump administration attempted to oust him while recognizing the opposition leader, Juan Guaidó, as the country’s president in 2019. The United States imposed sanctions on Venezuelan oil to starve Maduro’s government of cash.
Aside from the political whiplash of resuming oil trade with Venezuela to confront what the United States sees as a more immediate challenge in Russia, there are practical problems to ramping up production as well. Venezuelan oil fields have long suffered from mismanagement, and some industry analysts say it could be slow to increase supply.
“When you’ve had a prolonged period of underinvestment, you can’t just flip a switch and bring it back overnight,” said Saul Kavonic, an energy industry analyst for Credit Suisse.
The potential cut to global supply from sanctions on Russia would also require looking far beyond Venezuela to make up the shortfall, he added.
“Literally all options are going to have to be on the table in terms of sources of alternative supply,” Kavonic said. “No one source — whether that’s Saudi Arabia, Venezuela, Iran, the U.S. — is going to be able in itself to come anywhere close to replacing the totality of Russian supply if all Russian exports were to be subject to sanctions.”