The Possible Revival of Venezuelan Economy

Under the dictatorship of Nicolas Maduro, the economy of Venezuela has been turbulent in recent years. Although Venezuela has the greatest crude oil reserve in the world, corruption, excessive money printing, and sanctions by the US have prevented the nation from making the most out of its natural resources. With a record-high hyperinflation rate of 80,000% in 2018, it seemed like the Venezuelan economy would spiral out of control. 

However, on October 18th, the Biden administration announced that the US would ease the sanctions, authorizing Venezuela “to produce and export oil to its chosen markets for the next six months without limitation.” In exchange, the US demanded the freedom of opposition political parties and the release of US hostages. Why would the US change its approach to Venezuela, a country that has been following the anti-American route for decades?

Since the Ukraine War, Russia weaponized fossil fuel. When the allies of Ukraine such as the EU imposed economic sanctions on Russia, Russia reacted by cutting the natural gas pipes to Europe and banning the export of diesel and gasoline. This eventually led to increased oil prices, causing significant global inflation. The US reacted by setting a new record high in natural gas production, desperately trying to increase the supply. 

However, the recent Israel-Hamas conflict made the situation worse for the US. The summit held between Islamic nations in the Middle East condemned “Israeli aggression on the Gaza Strip, war crimes and barbaric and inhumane massacres by the occupation government.” Since the US supports the self-defense of Israel against the attack of Hamas, the atmosphere of reconciliation in the Middle East vanished and the negotiations with the major oil suppliers in the region have become highly challenging. 

Since both Russia and the OPEC members in the Middle East became enemies of the US, the US government had to look for another option to increase crude oil production to ensure a steady supply. On the list of the top 10 countries with the most crude oil reserves, only Canada and Venezuela are left after removing Russia and Middle Eastern countries. As a result, the US had no other option but to reach out to Venezuela, asking to increase fossil fuel production. Soon, Venezuela’s economy might be able to revive as the key supplier of oil across the world. 

It seemed like the value of crude oil reserves had reduced greatly throughout recent years as countries are moving towards more eco-friendly policies and pushing the reduction of fossil fuel usage. However, the economic harm caused by the two wars and the increase in oil prices proves that the era of fossil fuel has not ended. Even the greatest power in the world, the US, had to make a complete change in its policy regarding affairs with another country even though it opposes its key values of democracy and freedom. Until humans find a way to completely replace fossil fuel, the power of oil producers will remain strong.