Venezuela’s oil sector is once again under US sanctions, as President Nicolás Maduro continues to crack down on opposition. The decision to reimpose sanctions comes after an agreement reached in October between Maduro and the US-backed opposition in Barbados for upcoming elections turned out to be empty, with key opposition figures barred from running. Despite this setback, major companies like Shell and Repsol have engaged in deals with Maduro’s government and the state oil company PDVSA.
Ten years ago, Venezuela produced 2.9 million barrels of oil per day, but as of 2020, production had dropped to 400,000 barrels per day. With the easing of sanctions earlier this year, production saw a slight increase to 800,000 barrels per day in the first quarter. However, the US government has now decided to reintroduce sanctions on Venezuela’s oil sector while leaving the deal between Chevron and PDVSA untouched for the time being.
The reasons behind Venezuela’s decline in oil production are numerous, including mismanagement, lack of maintenance, and US sanctions. Despite these challenges, major companies have continued to do business with Maduro’s government and PDVSA. However, it remains to be seen how long these companies will continue to engage in such deals given the ongoing political instability and economic crisis in Venezuela.