Over the past few weeks, oil prices have finally started decreasing after a busy summer, higher demand, and geopolitical situations keeping prices high. Now, two major oil powers – the United States and Venezuela – are working on a deal to further boost oil exports.
The U.S.-led deal will trade political reform for looser sanctions on Venezuelan oil.
The U.S. and Venezuela are eyeing the new deal as a way for everyone to win. First, the U.S. will ease sanctions on Venezuelan oil companies and ease the restrictions that are limiting the amount of oil Venezuela can export throughout the world. In return, Venezuela will pledge to allow a competitive and internationally-monitored presidential election in 2024, when Venezuelan President Nicolas Maduro is up for reelection.
The U.S.-backed sanctions have been in place against Venezuela’s oil industry for several years, as Venezuela experienced a political crisis that saw the country have two people disputing the presidency and claiming leadership of the country.
Could even lower oil prices be in the near future?
If the deal comes to fruition, the world can expect even lower oil prices in the near future, as the oil trade will see more supply enter the market. Venezuela, for years, was one of the world’s largest oil exporters. Without the U.S.-backed sanctions restricting its oil industry, the country may again freely export oil, while the U.S. will be free to import Venezuelan oil. With lower oil prices already, the move may bring diesel and bunker fuel prices down, which would be a boon for the shipping industry.
As of yesterday, Brent crude oil futures were around $89 per barrel, which reflected a drop from the previous day’s close. The world will watch as there is a promise of further reduced oil prices and cheaper trade. At the same time, the Israel-Gaza conflict threatens to spiral into a larger regional conflict, which could increase fuel prices as we reported last week.