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US Prepares To Reimpose Venezuela Oil Ban As Biden Seeks Scapegoat To Resume Draining SPR

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by Tyler Durden
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For much of the past year, we had joked that behind the facade of western Democratic ideals, was a cold hard truth: the price of oil must not be allowed to go up in an election year. This was obvious in Biden's "kid gloves" treatment of Iran's regime, it was obvious when the US implemented "sanctions" on Russian oil that were breached within months with zero enforcement, it was also obvious when the US president became best friends with Venezuela's dictator Nicolas Maduro last October when, in exchange for a few thousands barrels of Venezuela's oil, the US lifted sanctions on the person that for years was one of western "democracies" biggest enemies.

Of course, there had to be some at least optical quid-pro-quo in exchange for the Biden detente so that the US president doesn't look not just senile but also totally stupid and incompetent, and sure enough Maduro agreed that he will hold "free elections" only to renege a few weeks later, while also rubbing Biden's face in Maduro's sudden leverage over the US president as we reported on various occasions:

And so, nearly half a year later after Biden's shocking detente with Venezuela's strongman, and having become the butt of all jokes, Bloomberg reports that Joe Biden’s administration intends to reimpose oil sanctions on Venezuela, ending a six-month reprieve, if Nicolas Maduro’s regime does not take steps in the next two days to honor an agreement to allow a fairer vote in elections scheduled for July.

The US plans to allow a Treasury Department license permitting oil and gas production to expire without renewal on Thursday, according to people familiar with the plan, who asked not to be identified without permission to speak publicly, if Venezuela fails to act.

The report goes on to note that the Biden administration has been trying to buy as much time as possible before finalizing the decision in hopes for an unlikely breakthrough that could change its plan, although that has clearly not happened.

Reimposing sanctions would end a brief respite that had foreign oil executives flocking to the South American nation. Renewed sanctions would set back Maduro’s efforts to restart Venezuela’s economy, which requires significant foreign investment to rebuild the country’s decaying oil infrastructure. Sanctioning the nation’s limited production will bear little immediate impact on the global oil market. But over the medium- to long-term, the lack of investment from Chevron Corp. and other outside investors could ultimately see Venezuela’s oil output decline.

Cracking down on the oil flowing from the country also threatens to drive rising US gasoline prices even higher. That poses a threat to Biden, who has struggled to calm voter anxiety over persistently high inflation in the US in an election in which the state of the economy is taking center stage.

But why now? Why would Biden's handlers lose so much foreign policy credibility over the past 6 months, just to U-turn now and go back to square one?  Well, as Bloomberg notes, if the license expires, "US actions would be taken to ease the impact on Americans and the US oil market."

Actions like what? Well, the same actions Pizza afficionado and White House senior adviser John Podesta said yesterday were on the docket unless oil prices drop, namely draining even more SPR oil.

"The president did it (release oil from SPR) before ... and I think he wants to keep the price of gasoline affordable and he will do what he can to make sure that happens," Podesta said at the BNEF Summit in New York. He stopped short of saying there would be a release from the SPR any time soon.

Of course he did, knowing the political outcry that would follow. But if the White House has a trigger, say an uncooperative Maduro to point the finger to, then an SPR drain is all but guaranteed.

Meanwhile, it was back when oil was $73 when various idiots made fun of us for pointing out that the SPR will never be refilled, aside for the occasional barrel here and there, injected purely for theatrical purposes.

We wonder what these upward-failing hacks will say when in its last days, the Biden admin's parting gift to the US will be to fully drain the SPR.

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