\n<\/p>\n
As the fallout from the United States\u2019 abduction of Venezuelan President Nicolas Maduro continues to unfold, an immediate question is how his ouster will impact Venezuela\u2019s economy.<\/p>\n
A lot will depend on any relief in US sanctions on Venezuela, relations between Maduro\u2019s replacement and the US, and, perhaps most crucially of all, what happens to revenues from Venezuela\u2019s vast oil reserves, according to analysts.<\/p>\n list of 4 items<\/span>end of list<\/span><\/section>\n Since Maduro\u2019s capture on Saturday, the US has issued a series of announcements about Venezuela\u2019s oil, the world\u2019s largest known reserves, at lightning speed.<\/p>\n On Wednesday, US President Donald Trump\u2019s administration, which has threatened Venezuela\u2019s interim government with further consequences if it does not cooperate with its demands, said Washington would control Venezuela\u2019s oil sales \u201cindefinitely\u201d.<\/p>\n US Energy Secretary Chris Wright said the US had already started marketing the sanctioned oil, held in storage until now due to the US embargo on Venezuelan exports, and that it planned to control all future sales.<\/p>\n Proceeds from those sales will be held in US Treasury accounts, with the money to be shared between the US and Venezuela, Wright said, without offering further details, including what proportion of the proceeds would go to Caracas.<\/p>\n Wright\u2019s comments came a day after the Trump administration\u00a0said it had struck a deal with Caracas to export up to $2bn worth of Venezuelan crude to the US, under which Venezuela will be \u201cturning over\u201d between 30 and 50 million barrels of sanctioned oil.<\/p>\n In the longer term, the Trump administration is likely to ease sanctions on the importation of Venezuelan oil \u201cand eventually [the] import of equipment and capital\u201d, Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, told Al Jazeera.<\/p>\n Trump, who has claimed that US oil companies are primed to invest billions in Venezuela\u2019s oil sector, will likely issue licences to specific US businesses, facilitating an influx of foreign investors who can provide capital, equipment and expertise, Ziemba said.<\/p>\n Venezuela\u2019s current oil output, at close to 1 million barrels per day (bpd), is far below the 1990s peak of 3.5 million bpd.<\/p>\n But none of this is expected to take place any time soon.<\/p>\n Ziemba said she anticipated that the US would maintain some sanctions on Caracas, though some oil exports are likely to continue to escape the measures, especially if Washington does not share revenues with the country.<\/p>\n Despite the Trump administration\u2019s announcements, there continues to be a \u201cgreat deal of uncertainty\u201d about what will happen next, said Cynthia Arnson, an adjunct lecturer at the Johns Hopkins School of Advanced International Studies.<\/p>\n \u201cOil companies make very costly investments and usually in difficult environments. So until it\u2019s clear which way this is going, and how much stability is there \u2026 the idea that the capture of Maduro will cause US oil companies to jump into Venezuela is also a myth,\u201d Arnson told Al Jazeera.<\/p>\n There is a chance things could worsen for the Venezuelan economy before they get better, especially as it is not clear how soon \u2013 if at all \u2013 the US government will reimburse the country for its sanctioned oil.<\/p>\n According to Tim Hunter, senior economist for Latin America at Oxford Economics, 78 percent of the Venezuelan government\u2019s budget is allocated to social spending.<\/p>\n With those finances squeezed, there could be \u201cvery quick knock-on consequences in terms of social spending, which in turn comes with a risk of social unrest\u201d, Hunter told Al Jazeera.<\/p>\n Already, locals are experiencing a sharp increase in prices in some daily essentials, as Al Jazeera has reported.<\/p>\n Ultimately, oil revenues will be key to the revival of Venezuela\u2019s economy, said Benjamin Radd, a senior fellow at the UCLA Burkle Center for International Relations.<\/p>\n But getting the Latin American country\u2019s oil market ready will take massive investment in infrastructure, \u201cso we are years away before we see any of that in Venezuela\u201d, Radd told Al Jazeera.<\/p>\n While Trump has pledged to \u201crun\u201d Venezuela and control energy sales, there has been little clarity on what that would entail.<\/p>\n \u201cTrump has been very vague on this entire process,\u201d Radd said.<\/p>\n A key factor is the structure of Venezuela\u2019s government, which has been left largely in place, in contrast to the de-Ba\u2019athification of Iraq following the US\u2019s 2003 invasion.<\/p>\n \u201cIt is also not clear what is the status of the legitimacy of the current Venezuelan government, [or] what economic measures can they even undertake,\u201d Radd said.<\/p>\n \u201cThere are a lot of unknowns here.\u201d<\/p>\n<\/div>\n As the fallout from the United States\u2019 abduction of Venezuelan President Nicolas Maduro continues to unfold, an immediate question is how his ouster will impact Venezuela\u2019s economy. A lot will depend on any relief in US sanctions on Venezuela, relations between Maduro\u2019s replacement and the US, and, perhaps most crucially of all, what happens to […]<\/p>\n","protected":false},"author":1,"featured_media":7889,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-7888","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latin-america-news"],"_links":{"self":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts\/7888","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7888"}],"version-history":[{"count":0,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts\/7888\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/media\/7889"}],"wp:attachment":[{"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7888"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7888"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7888"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Recommended Stories <\/h2>\n
US oil company interests \u2018a myth\u2019<\/h2>\n
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