A possible oil embargo against Russia and rising gas prices are driving US action in Venezuela

MIAMI — Senior U.S. officials secretly traveled to Venezuela over the weekend to thaw hostile ties with Vladimir Putin’s key ally in Latin America, a top oil exporter whose re-entry into U.S. energy markets could mitigate the fallout at the pump from a potential oil embargo on Russia.

The outcome of talks with President Nicolas Maduro’s government was not immediately clear.

The surprise visit comes after months of silent backchanneling by intermediaries — American lobbyists, Norwegian diplomats and international oil executives — who have been urging Biden to continue the failed “maximum pressure” campaign to oust Maduro that he inherited from the Trump administration picks up once.

But the impetus for a risky crackdown on Maduro – who has been sanctioned and charged in New York with drug trafficking – gained urgency after the Russian invasion of Ukraine and subsequent US sanctions, promising to reshuffle global alliances and the rising Raising gas prices is already pushing inflation to a four-decade high. Powerful Democrats and Republicans alike began voicing their support for a US ban on Russian oil and natural gas imports on Capitol Hill last week as the next step in punishing Putin for the invasion.

The US delegation was led by Juan Gonzalez, senior director of the National Security Council for the western hemisphere, according to two people who were briefed on the condition of anonymity about the visit to discuss US policy. He was accompanied by Ambassador James Story, the top US diplomat in Caracas, when the Trump administration severed ties with Maduro in 2019 and recognized opposition leader Juan Guaido as the country’s legitimate president.

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But it was the presence of another State Department official, Roger Carstens, the president’s special envoy for hostage affairs, that had raised hopes that Maduro might be willing to release American prisoners in a show of goodwill towards the Biden administration.

Carstens previously traveled to Caracas in December and met in prison with six oil executives from Houston’s Citgo, former US Marine Matthew Heath and two former Green Berets arrested in connection with a failed raid to oust Maduro from neighboring Colombia .

The Biden administration has been considering easing tough oil sanctions on Venezuela in exchange for a pledge by Maduro to return to negotiations with his opponents, which he broke off last fall when a key ally was extradited to the US over corruption charges US officials on condition of anonymity to discuss internal deliberations.

An alternative is for Chevron, the last American oil company in Venezuela, to ramp up production and possibly resume oil exports to Gulf Coast refineries that are tailor-made to process the country’s tarry crude, the official said ahead of the Shuttle diplomacy over the weekend. Due to US sanctions, Chevron is prohibited from performing any work other than basic maintenance on wells that it conducts in conjunction with PDVSA, the state-owned oil giant.

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Maduro has shown little sign that he is prepared to abandon Putin in his hour of need. He spoke to the Russian president over the phone last week to show his support and attended a rally in Caracas where Putin’s ambassador received a thunderous ovation from supporters of the ruling Socialist party

“It is a crime what they are doing to the Russian people, an economic war,” Maduro said at an event where he railed against the decision by the US and its allies to kick Russia’s banks out of the SWIFT payment system and enforce a flight ban for its airlines. “It’s insane what they’re doing.”

But that high-flown rhetoric aside, Western sanctions against Russia and bipartisan support for a full-scale oil embargo pose a major threat to Maduro’s ability to maneuver as successfully as he has done so far.

In the wake of US sanctions, Russia has become the most important buyer of Venezuela’s crude oil. Last year, PDVSA sold around $2.5 billion worth of crude oil to Russia, according to an industry expert on condition of anonymity to discuss non-public trade data. That corresponds to about a quarter of the total foreign exchange reserves of the South American country.

While some of those sales were used to pay down debt, more than $1 billion was brought back to Caracas to cover operations of ailing state oil giant PDVSA, the industry source said. With its own accounts in the US and Europe frozen, PDVSA is also receiving payments for oil shipments from Moscow’s Promsvyazbank, one of the state entities sanctioned by the Biden administration for its ties to the Russian military.

What is less clear is how US flexibility would relieve pressure at the pump. Despite sitting on top of the world’s largest oil reserves, Venezuela’s oil production plunged last year to its lowest level in a century. Although production started to increase towards the end of 2021, the 755,000 barrels per day produced in January represents only a fraction of the more than 10 million barrels per day that Russia pumped last year.

AP writers Eric Tucker in Washington and Regina Garcia Cano in Caracas, Venezuela, contributed to this report.

Copyright © 2022 by The Associated Press. All rights reserved. A possible oil embargo against Russia and rising gas prices are driving US action in Venezuela

Dais Johnston

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