Venezuela's Oil: The Tariff Twist

The United States is planning to hit countries buying Venezuelan oil with a 25% tariff. This move is part of a broader strategy to pressure Venezuela, which has been a significant oil supplier to the US. The tariff announcement came from the White House, which accused Venezuela of sending criminals to the US. This claim lacks solid evidence, raising questions about its validity. The tariff is set to take effect on April 2, a day dubbed "liberation day" by the White House. This date is also when other tariffs on various imports were supposed to start. However, there are signs that these tariffs might be delayed. The stock market seemed unfazed by the latest tariff threat, opening higher on the day of the announcement. Venezuela was a major oil supplier to the US in 2023, with the US importing $5. 6 billion worth of oil and gas. This happened after the Biden administration briefly lifted sanctions on Venezuelan oil in 2023. The sanctions were reinstated in April 2024 due to accusations of election fraud by Venezuela's leader, Nicolás Maduro. Despite the sanctions, Venezuela's oil shipments to the US were far behind Canada's, which supplied 60% of the US's oil imports. Before the tariff announcement, the White House was already planning to limit Venezuelan oil imports by revoking Chevron's license to operate in Venezuela. This move was seen as a punishment for Venezuela's refusal to accept deportees accused of being part of the Tren de Aragua gang. However, Venezuela has since agreed to resume repatriation flights, receiving 200 deportees on the day of the tariff announcement. Some families of the deportees claim their relatives are not criminals, and there is little evidence to support the administration's claims. The tariff on Venezuelan oil is a significant development in US-Venezuela relations. It remains to be seen how this will affect the oil market and the countries involved. The situation is fluid, and more details are expected to emerge.