White House confirms diplomatic trip to Venezuela to talk energy security

The US sent officials to Venezuela to discuss energy security and detained US citizens, the White House confirmed March 7, after media reports indicated the Biden administration was in the early stages of considering lifting oil sanctions against the Maduro regime.

The potential abrupt shift in stance toward Venezuela comes as global oil prices spike to 14-year highs as Western governments consider bans on Russian imports and traders avoid the flows.

Psaki added that President Joe Biden has not decided whether to impose a ban on Russian oil imports to the US, as lawmakers from both parties support in Congress.

"What the president is most focused on is ensuring we are continuing to take steps to deliver punishing economic consequences on Putin while taking all action necessary to limit the impact to prices at the gas pump," Psaki said.

In November, the Biden administration reiterated support for Venezuelan opposition and interim President Juan Guaidó, blasting regional elections that month as fraudulent.

Asked by a reporter March 7 if it was worth re-engaging with the Maduro regime "to drive down gas prices," Psaki responded: "I think that's leaping several stages ahead in any process. ... At this point in time, I don't have anything to predict. It's ongoing."

The Trump administration sanctioned state-owned PDVSA in January 2019, cutting off flows of Venezuelan crude to US Gulf Coast refiners among others.

In October 2020, the US blocked refiners in India, Italy, and Spain from supplying Caracas with diesel cargoes in exchange for Venezuelan crude. The Biden administration reportedly came close to allowing the crude-for-diesel swaps to restart on humanitarian grounds. but ultimately decided to keep the ban in place.

An uptick in Venezuelan output

In February, PDVSA and its foreign partners produced an average of 680,000 b/d of crude, according to internal daily production reports reviewed by S&P Global Commodity Insights.

This represented a slight increase from January's 668,000 b/d reported by secondary sources in OPEC's Monthly Oil Market Report.

Venezuelan production in February was inconsistent because of frequent power failures, accidents, fires, and thefts in the oil fields, as well as the saturation of crude inventories because of the scarce availability of tankers, according to reports.

The average Orinoco Belt output was 370,000 b/d, 70,000 b/d over the 300,000 b/d reported in January. Iranian condensate was key to maintaining the production of blended crude in the Orinoco Belt. An Iranian vessel unloaded 2 million barrels of condensate in Jose, Puerto La Cruz, Jan. 31. No information was available on additional condensate supplies from Iran for February or March.

The 8.5% API extra-heavy crude extracted from the giant Orinoco Belt oil field can only be marketed if it undergoes an upgrading process by blending it with light crude, condensates, or naphtha.