Biden Confronts Tough Choice Over Venezuela Oil Sanctions

Joe Biden must decide this week whether to reinstate oil sanctions on Venezuela — a matter entangled with two of the American president’s biggest headaches in an election year: inflation and immigration.

The six-month waiver allowing his counterpart, Nicolas Maduro, to export crude to the US expires tomorrow.

As part of that deal, Maduro agreed to ensure his own reelection bid this summer would be free and fair. Yet he has since thrown his chief opponent off the ballot, jailed members of her staff and blocked Venezuelan emigrants from registering to vote.

Despite this, the US decision on whether to reimpose sanctions isn’t a foregone conclusion, and that’s thanks in part to rising gasoline prices.

Gas at the pump has jumped 17% this year to the highest since October, even as Biden tries to assure voters that inflation is under control.

Cracking down on oil flows from Venezuela would threaten to drive up fuel prices further.

Likewise, the US president will be cautious about further disrupting crude exports from Russia and Iran — also subject to American sanctions — for fear of pushing the global market into a deeper supply deficit.

“Concerns over gasoline prices and inflation are taking center stage, making it less likely that Washington will reimpose oil sanctions” on Caracas, said Fernando Ferreira, director of geopolitical risk at Rapidan Energy Advisors.

Then there’s the matter of immigration.

Poverty and oppression are prompting millions to flee Venezuela. Many wind up at the US border, adding to the surge in asylum seekers pressuring Biden as he gears up for a rematch against Donald Trump.

There was some hope that lifting sanctions would improve economic conditions and ease that issue. But if Maduro wins another term, analysts expect the exodus to quicken.

Biden may opt to extend Venezuela’s reprieve from sanctions until shortly after that country’s July election, which Ferreira believes to be the most likely option.

The US could then gradually reinstate the penalties. Most analysts, however, don’t expect a full ban in line with Trump’s 2019 restrictions that essentially blocked American refiners from buying any crude from Caracas.

Either way, the stakes are high, forcing Biden to balance the need to promote democracy in Venezuela against his electoral fortunes at home.

–Lucia Kassai, Bloomberg News