U.S. President Joe Biden on Tuesday banned U.S. imports of Russian oil in retaliation for the invasion of Ukraine. Now, the U.S. officials have demanded that Venezuela supply some of the oil exports to the U.S. to ease oil trading sanctions on the OPEC member nation, reports Reuters citing people close to the matter.
Venezuela has been under U.S. oil sanctions since 2019 and could reroute crude if those restrictions were lifted. The officials said that any relaxation in U.S. sanctions would be conditional on Venezuela shipping oil directly to the U.S.
Chevron Corporation (NYSE:CVX) could be the first beneficiary if a deal is reached with Maduro's administration. Chevron has been banned from shipping Venezuelan oil since 2020. If the U.S. decides to ease sanctions, Chevron could partially recover production in Venezuela and resume exports, replacing the Russian fuel.
Oil prices rose another 5% to $128 per barrel, and Britain said it would phase out Russian imports by the end of 2022. Venezuela's oil production last year averaged 636,000 bpd. Officials noted that it could boost output and exports, but analysts believe that further increase is not possible without new spending.
Also, many refiners in the U.S. Gulf Coast importing Russian oil could potentially resume processing Venezuelan heavy oil and fuel.
Before sanctions, Valero Energy Corporation (NYSE:VLO), Citgo Petroleum, Chevron, and PBF Energy Inc (NYSE:PBF) were among the top U.S. buyers of Venezuelan oil.
Price Action: CVX shares are down 2.25% at $166.70 during the premarket session on the last check Wednesday.
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