Biden is unlikely to reimpose oil sanctions on Venezuela

U.S. officials are concerned that reverting to Trump-era sanctions that accelerated the decline of Venezuela’s oil production would raise the price of gas at U.S. pumps and prompt more migration from Venezuela as President Biden campaigns for re-election in November. Restricting Western oil companies would also tighten global energy supplies and open space for Chinese investment, they say.

Biden administration officials have said they didn’t think that the oil sanctions—leveled against Venezuela in early 2019 in former President Donald Trump’s effort to force Maduro from power—was constructive.

Top officials including national security adviser Jake Sullivan; Amos Hochstein, senior White House energy adviser; and Deputy national security adviser Jon Finer are encouraging a different approach that emphasizes broader strategic interests such as energy supply over political change in Caracas.

“We are committed to maintain sanctions relief if Maduro and his representatives uphold the commitments outlined" in the deal they signed in October for an electoral roadmap, a senior U.S. administration official said Friday. “We urge Maduro to do so."

Maintaining the current policy “spells a greater opportunity of keeping Venezuela as part of the Western marketplace, less inclined to spin back in the direction of China and Iran," said an oil industry adviser familiar with the deliberations.

A Venezuelan analyst close to the industry said the administration’s “dominant strategy is not to revert back to sanctions. Why? Because they think they didn’t work and they don’t make sense."

In October 2023, after secret talks between U.S. and Venezuelan officials in Qatar, the Biden administration issued a six-month general license, which expires April 18, allowing oil companies to work in Venezuela. The license expanded an easing of sanctions that since late 2022 had been mostly limited to Chevron, the largest private company with assets in Venezuela. In exchange, Maduro’s regime pledged to work toward free and fair elections this year and agreed to receive Venezuelan deportees as the U.S. grapples with record migration.

Instead, the government halted the short-lived deportation deal, arrested a range of political opponents and banned from office Maria Corina Machado, an opposition politician who had been chosen in a primary to challenge him.

When Machado and opposition political parties last week named an 80-year-old grandmother and academic as a replacement candidate, the government banned her, too. A poll by the American company ClearPath Strategies showed Machado or any candidate she backed would easily defeat Maduro in a vote.

“I said at the time, you lift the sanctions now, you take away your own leverage," said Eric Farnsworth, a former high-ranking State Department diplomat who is vice president of the Council of the Americas policy group in Washington. “That is exactly what happened."

While expressing concern about the ban, White House press secretary Karine Jean-Pierre  earlier this week said the U.S. wouldn’t reimpose sanctions if Maduro “upholds the commitments" made to move toward free and fair elections.

The American response contrasted with that of Argentine President Javier Milei’s government, which issued a statement calling on Maduro to “ensure the safety and welfare of the Venezuelan people as well as convening transparent elections." In Brazil, President Luiz Inácio Lula da Silva and French President Emmanuel Macron called the exclusion of the Venezuelan candidate, Corina Yoris, “serious."

“I just want the elections carried out the way they are in Brazil, whoever wants to take part, takes part," said da Silva.

The Biden administration is likely to extend the current policy until July 28, when Venezuela will hold elections, people familiar with administration thinking say, allowing oil companies and traders to engage with national oil company Petróleos de Venezuela for now. U.S. oil executives are negotiating deals in Caracas in the hope of a more enduring commercial opening.

Those familiar with the administration’s thinking don’t rule out some punitive measures, such as restricting payment for Venezuelan oil to local currency rather than U.S. dollars.

“Fundamentally, the maximum pressure strategy was something that did not lead to the outcome it intended to promote regime change through crushing sanctions," Juan Gonzalez, who until recently was the White House’s top Latin American adviser, told reporters in February.

The Biden administration has quietly retained Gonzalez as a go-between with Venezuela in ongoing talks, the people familiar with the matter said. A face-to-face meeting is scheduled for early April, possibly in Doha or Mexico City. Among the U.S.’s top concerns regarding Venezuela has been the exodus of migrants, hundreds of thousands of whom have sought asylum after crossing the American southwestern border.

For some analysts who track U.S. policy in Latin America, the Biden administration’s opening to Maduro failed.

“After all that’s been done, without snapping back sanctions, we lose credibility," said Ryan Berg, who tracks Venezuela at the Center for Strategic and International Studies in Washington. “If we don’t have accountability, I think Maduro would be laughing at us."

Geoff Ramsey, Venezuela director at the Atlantic Council in Washington, said a policy that gives priority to Western energy interests would require “significant concessions" from Maduro.

“I don’t see the administration completely scrapping a democracy and human rights agenda," he said. “The White House has walked a fine line between pursuing U.S. energy and geopolitical interests while also trying to encourage a gradual democratic opening in Caracas."

In Caracas, foreign energy executives say they have taken comfort in the U.S.’s unwillingness to sever business ties with Venezuela, despite the rocky political climate.

Chevron, which was given a special license by the U.S. Treasury in 2022 to operate in Venezuela, plans to drill dozens of wells this year in a bid to raise its output to 200,000 barrels a day, roughly a quarter of the country’s total production.  Italy’s Eni and Spain’s Repsol have also been operating under special exemptions that the U.S. made to its sanctions policy. Other oil companies are in talks with the U.S. over securing terms similar to Chevron’s.

Write to Kejal Vyas at kejal.vyas@wsj.com and Juan Forero at juan.forero@wsj.com