Venezuela and the United States have been making significant progress in talks, potentially leading to sanctions relief for Caracas. This development could pave the way for an additional foreign oil company to utilize Venezuelan crude oil as a means of debt repayment.
What Happened: A Reuters report on Monday indicates that both nations have been discussing the possibility of allowing PDVSA’s joint venture partners, including Maurel & Prom EBLMY, to accept Venezuelan oil as debt settlement. This decision hinges on whether Venezuelan President Nicolas Maduro resumes talks with the opposition in Mexico.
The discussions, which have been underway in Qatar since last year, are part of an initiative aimed at addressing Venezuela’s protracted political and economic crisis. A wide range of issues, including the potential for a presidential election in Venezuela, have been part of the conversation.
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Continued negotiations between Maduro’s representatives and the Venezuelan opposition representatives are expected in the weeks to come in Mexico, sources told Reuters.
No comments have been made yet by the U.S. State Department, Venezuela’s and Qatar’s foreign affairs ministries, or PDVSA regarding these reported advancements.
Despite the absence of a final agreement, insiders in Washington confirm that the discussions have seen significant progress in recent weeks, according to Reuters. However, they caution that any conclusive agreements may still be premature at this stage.
Why It Matters: Venezuela’s crude oil production increased to approximately 820 barrels per day in August, the highest since late 2021, as reported by OPEC data. However, prior to the imposition of sanctions, Venezuela used to produce around 2,500-3,000 barrels per day.
A significant portion of this production capacity has been lost due to years of sanctions. Nonetheless, a partial recovery of Venezuela’s oil production could help ease the strain on the global crude supply, especially considering that Saudi Arabia and Russia have committed to cutting nearly 1.5 million barrels per day until the year’s end.
The United States Oil Fund USO, which tracks the performance of the West Texas Intermediate (WTI) benchmark, rose 4% on Monday, in reaction to the war between Israel and Hamas.
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