Venezuela Looks to Russia and Middle East for Help Reviving Struggling Oil Sector Amidst US Sanctions

In an effort to boost its struggling oil sector, Venezuela is turning to Russia and the Middle East for assistance as US-led sanctions and mismanagement have taken a toll on the country’s oil output.

Iran has been supplying Venezuela with diluents through a longstanding swap agreement, and sources familiar with the matter report that Iran has increased its supply of key crude that Venezuela can use to upgrade its aging refineries.

Venezuela is also partnering with Russia, with Venezuelan officials meeting with representatives of Russian oil giant Rosneft last week. The meeting was prompted by Cuba’s urgent need for Venezuela’s hydrocarbons due to a decrease in their own oil flow.

Venezuela’s oil output has substantially decreased from 1.9 million bpd in mid-2017 to less than 350,000 bpd in the second half of 2020 and has remained at this level for over a year. This decline follows the steep drop in oil prices in 2015, which left Venezuela, once one of the richest oil-producing countries, one of the poorest.

US sanctions were already in place by the time socialist leader Hugo Chávez passed away in 2013, and they were expanded in 2018 after Nicolás Maduro’s re-election. Despite the challenges, Venezuela is making every effort to revive its oil sector.