The U.S. State Department has allowed Italian oil company Eni SpA and Spain's Repsol SA to begin shipping Venezuelan oil to Europe to make up for Russian crude. The decision was confirmed by five unnamed sources said to be familiar with the subject, Reuters reported.
“The volume of oil Eni and Repsol are expected to receive is not large, one of the people said, and any impact on global oil prices will be modest,” a recent Reuters report reveals. “But Washington's greenlight to resume Venezuela's long-frozen oil flows to Europe could provide a symbolic boost for Venezuelan President Nicolas Maduro.”
The exchange is set to begin as soon as next month, according to Reuters.
The permission was granted by the American agency in a letter after it resumed oil-for-debt swaps, which were halted two years ago when the U.S government opted for sanctions against Venezuela. One of the agreement’s terms clearly states that the oil received "has to go to Europe. It cannot be resold elsewhere."
U.S. President Joe Biden's administration is currently working toward cutting its reliance on Russia and redirecting Venezuela's cargoes from China.
“Washington believes PDVSA will not benefit financially from these cash-free transactions, unlike Venezuela’s current oil sales to China,” a source affirms, according to Reuters. “China has not signed onto Western sanctions on Russia and has continued to buy Russian oil and gas despite U.S. appeals. The authorizations came last month, but details and resale restrictions have not been reported.”