January 2022 – Mariana Vargas* – 2022 started and here is a quick status quo; we are seeing China leading the global economy, Europe welcoming a new German prime minister, Omicron new variant all around the world, South America turning left, beginning with Peru, now Chile and maybe Colombia this year. Ukraine-Russian conflict impacting the world geopolitics. With this complex framework, we turn in to The United States. Their energy situation remains multifaceted.
When talking about politics between Russia and United States have made it clear they can’t see eye to eye, but how about commerce. United States ended 2021 with Russia being its second largest crude importer. By 2018 Russia represented 4% of US total imports, in January of 2021 that figure doubled. What happened? Well, Venezuela was exporting sour and heavy crude to the US refiners, however since 2019 sanctions hit harder than expected and the Venezuelan regime couldn’t hold up production, therefore the US began buying Moscow’s crude.
Most readers may be asking, why is Russia taking the empty chair Venezuela left and not ask Saudi Arabia for more oil and hold this growing dependence towards Russian oil. The answer is that most refiners in the US need sour and heavy oil, like mentioned previously and Saudi Arabia produced mostly light crude. The growing question is why did the United States decided to depend on Russia and not from Venezuela. Clearly, sanctions could’ve been eased and manipulated to their advantage. Just like we are seeing now, most Russian sanctions that US has imposed don’t affect the Russian oil industry directly. We are even seeing how the Biden administration is practically begging Russia to increase oil production so oil prices maintain. If oil prices continue growing and the US inflation numbers keep rising, then Biden may kiss reelection goodbye.
As we see it, the United States energy policies lack of consistency. They wouldn’t make deals with Venezuela because of human rights violations and corruption or maybe because Venezuela is a threat for the region, but they are doing business with Russia; who invaded Ukraine, violated human rights in the process of invasion and inside of Russia itself with reporters, politicians and protesters, besides corruption.
Maybe the reason to rely on Russian supply crude instead of Venezuelan, is that the Hispanic community in Florida plays a decisive role in US elections. There was a high political cost to buy Venezuelan crude until now. Now Biden administration should decide if to stop Russian supply and relax Venezuelan sanctions in order to allow Venezuela crude to feed US Gulf refineries. In both scenarios the energy administration will be between Scylla and Charybdis.
*Mariana Vargas_ International Analyst at Venezuela
