Maduro: Venezuela economy likely grew 7.7% in 1H y/y

Maduro: Venezuela economy likely grew 7.7% in 1H y/y

In a significant development, Chevron has resumed operations in Venezuela, transferring part of its oil production to the Maduro government. This move, reported by Bloomberg, follows a U.S. sanction exemption granted to Chevron, allowing it to continue operating in Venezuela [1].

The terms of the deal are similar to those of other international oil majors operating in Venezuela, involving royalty payments in the form of crude oil. Notably, Chevron was previously banned from making cash payments to the Venezuelan government, a condition for its return [1].

The U.S. government's objective has been to prevent the Venezuelan government from benefiting financially from its oil wealth. However, the reality is more complex. U.S. refiners are substantial buyers of Venezuelan crude, and Chevron's return is set to gradually increase the supply of heavy crude grades to the market over the second half of the year [1].

This development is likely to have a negative impact on prices for heavy crude grades. However, attempting to prevent any financial benefit to the Venezuelan government from Chevron's activities could lead to retaliation and the loss of these valuable barrels of heavy crude for Gulf Coast refiners [1].

Maduro's recent statement that the Venezuelan economy grew by 7.7% in the first half of the year suggests that the country's economic situation is improving. However, the long-term effects of Chevron's return on Venezuela's economy and the U.S.'s ability to prevent the Maduro government from benefiting financially remain uncertain [2].

References:
[1] https://oilprice.com/Latest-Energy-News/World-News/Chevrons-Return-to-Venezuela-Fuels-Controversy-Over-Oil-Payments-to-Maduro.html
[2] Maduro: Venezuela economy likely grew 7.7% in 1H y/y