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What would it mean if Venezuela returned to exporting oil to the United States?
The Latin American country with one of the largest crude oil reserves could have dealings with the world power again, in order to give up Russian energy services completely
A few weeks ago, US President Joe Biden sent a delegation to explore the possibility of loosening the noose that Donald Trump had placed around Venezuela's neck in 2019.
But this fact does not come by magic, the politics of business at the moment is correlated with the conflict in Russia. The United States and its allies want to make sure they get another prospect to take Russia's place in the world economy.
Clearly, they have remembered that Venezuela has the largest oil reserves in the world. The precious black gold they are now desperate for, but what does that mean for Venezuela and its investors?
The United States is quickly looking for an oil ally in Venezuela
The sanctions imposed in 2019 after the Venezuelan presidential elections, not accredited before the international eye, formed a great economic blockade for a country that was going directly to the largest inflation in the world.
Joe Biden and his cabinet think that loosening these sanctions could bring him that new ally, perhaps completely shutting Russia out of the oil market. Let us remember that Russian oil is one of the best-selling and with the most production globally.
But this, in the same way, is an ally of Venezuela. And it is the one that has provided aid to the Venezuelan oil industry. And if Venezuela is an ally of Russia, it does not seem possible to maintain relations with both sides equally.
This means that at the beginning with the political issue there is a problem of charges that could be counterproductive for these three countries mentioned.
Not only this reason of business and "political" treaties, are the ones that would stop an energy alliance between Venezuela and the United States with a short-term start, there are also forceful factors in the daily activity of crude oil.
Venezuela does not have a large crude platform today
The Latin American country still has the largest oil reserves on planet earth, but we cannot say that its oil industry is the best of all, not even close.
Venezuela has been having problems with crude since the conversion of its company PDVSA into a public platform, since "socialism" came to control this country.
Notoriously, this came in rapid decline because of those so-called sanctions, because Venezuela could not sell its oil tanker. The one that was its only export force for several years.
There is no investment in maintenance of the oil sector
The Venezuelan oil industry does not have the best technologies in this sector, and many of its plants are in poor operation because the investment in maintenance and revision is practically nil.
Its daily production years ago reached about 3 million barrels per day. After the sanctions, just over 400 thousand barrels were his daily mark. And although this number has now doubled, it is still totally ordinary.
This is clearly a huge problem if this industry is to take the place of Russia, which contributes 11 million barrels per day, and which normally provided 5 million to 6 million barrels of crude oil to Europe.
What the United States would have to do beyond investing
Healing the relationship between the United States and Venezuela will not be easy, although we believe that with the money that a deal like this will bring to the Latin American country, it would be easier to prosecute the communism that lives in that territory.
Beyond securing an alliance for the sale and purchase of Venezuelan crude, the United States will have to contribute a lot of money for the industry to flourish again. Not only to lift it, but also to maintain it.
This means that the speed of oil production sought by the United States will not be found in Venezuelan crude. We must remember that these are proposals that remain under evaluation. Nothing has been decided yet, no deal done.
If this happened… What would happen to the Venezuelan economy?
The oil business is not one of the most profitable activities globally for nothing, although technology has advanced to a more ecological point, oil is still necessary. This is something that Elon Musk himself has mentioned recently.
This would clearly change the path that the Venezuelan economy has been taking for several years. Despite the fact that now it is not the country with the most inflation (its position is occupied by Argentina). It is still a long way from being at stable levels.
The Venezuelan land and its oil industry would return to the way it was before, with a lot of work involved, if it begins to export oil to the United States again. It's practically one of the best things that could happen to this country right now.
International investments would see not only an ally in crude oil, but in much more, and business life in Venezuela would be active and with projects on the horizon.
Despite this, it would also mean that the government they have wanted so badly to remove from office would become stronger in improving its national finances, and they may never be able to remove it from power.
Which would also bring a diversion of the great flow of money that would be obtained from deals like these. Returning to a better cycle and with less pressure, but even so, it would still be insufficient for the quality of life of Venezuelans, due to the corruption of its leaders.
