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Biden Turns to Venezuela for Oil After OPEC Slashes Production

(Photo by Pedro Ramses Mattey/Getty Images)
(Photo by Pedro Ramses Mattey/Getty Images)

The Biden administration proposed a deal that will ease sanctions on Venezuela, allowing Chevron to pump oil in the country after the consortium agreed to its largest production cut since the COVID-19 pandemic, The Wall Street Journal reported Wednesday.

The U.S. will unfreeze hundreds of millions of dollars of Venezuelan state funds held up in American banks and in exchange, the country will allow Chevron to produce oil on its lands, according to the WSJ, which cited sources familiar with the deal. The proposal comes after OPEC agreed earlier on Wednesday to cut oil production by two million barrels a day, a decision the White House called “shortsighted,” according to a statement

The Biden administration believes that if Chevron and other U.S. companies are allowed to resume working in Venezuela — a founding member of OPEC — it could signal an increase in global supplies, which could lower oil prices, the WSJ reported. OPEC and its Russia-led allies cut production in order to keep prices steady as they fear that demand for oil could drop amid growing concerns of a global recession.

The White House is scrambling to respond to rising gas prices as it is concerned that price hikes at the pump could hurt the Democrats’ chances in November’s midterm elections. Energy analyst Patrick De Haan predicted on Wednesday that OPEC’s cuts could raise domestic gas prices by 15 to 30 cents.

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