Pentagon Taps Venezuelan Oil Deal Amid Strategic Shift
The US Department of Defense is in negotiations with a Venezuelan businessman for a massive oil deal. This development marks a significant shift in how Washington approaches engagement with Venezuela's oil industry, which has been marred by sanctions and stop-start agreements over the years.
Historically, deals between the US and Venezuela have involved relieving sanctions, granting licences to specific companies, or negotiating volume arrangements that allow for incremental deliveries of heavy sour barrels into the US Gulf Coast. These deals often rely on refineries in the region being configured to handle this type of crude.
The unusual aspect of the current negotiations is that they involve the Pentagon as a counterparty, rather than State or Treasury departments, which have typically handled such agreements. This suggests a strategic or security-focused approach, possibly tied to supply for defence stockpiles or leverage in broader negotiations.
As with previous agreements, it remains to be seen whether this deal will survive the political cycle in Washington and Caracas. Key factors to watch include any licence or sanctions language attached to the deal, as well as the identity and track record of the Venezuelan principal involved.