Venezuela May “Sell” Oil to Europe to Pay Foreign Debt, Even With U.S. Blockade; Understand How Agreement Is Expected to Work

The Country With The Highest Inflation Rate In The World May Pay Its Debt And Help Europe During The Oil Crisis Triggered By The Russians.

The Italian oil company Eni SpA and the Spanish Repsol SA stated in an interview with Reuters that they are interested in sending oil from Venezuela to Europe in order to pay the debts that the socialist country, governed by Maduro, has to Europe. The decision was made as a way to counter the sanctions imposed by the United States, led by Joe Biden, against Russia. Russia was one of the countries responsible for global oil exports and is now facing intense restrictions on its sales. The decrease in Russian oil production, considering the sanctions, is causing Brent to reach one of its highest values in history.

The debt of Venezuela to Brazil, according to data belonging to BNDES, is in the range of US$ 436.85 million. The country has been facing economic blockades following some interventions imposed by Trump, but it may revive its economy with this new export opportunity.

Oil Crisis Caused Price to Reach US$ 122 Per Barrel And Discussions From Saudi Arabia Will Impact Commodities

According to the state-owned company Arab Light, which belongs to Saudi Arabia, it is estimated that the barrel price will be negotiated by the country will have an increase of at least 6 dollars per barrel this June. The decision was made as a way to address the lack of barrel stocks in the institution after the halt of Russian sales globally.

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Some traders commented on their social media that the decision, despite the unexpected increase of over 300% from what was initially estimated, would not have negative results for the state-owned company of Saudi Arabia because a large part of the countries in the East are being forced to buy from them to maintain fuel prices.

Biden Had Already Raised The Hypothesis of New Negotiations With Venezuela Despite Its Ideological Differences

Despite the ideological differences between the United States and Venezuela, Biden had already raised the hypothesis that he could return to negotiating with Venezuela due to the sanctions he imposed on the Russians at the end of February following the orders given by Putin to the Ukrainians. According to what has been stated by Putin, the Ukrainians were not complying with what was stipulated in the contract between the two countries that was signed during the 1990s.

Putin made this decision upon seeing that the price of oil in the United States was significantly increasing without Russian reserves, and that even with increased productivity in the country, they were unable to maintain their prices.

The impacts of oil prices also reach Brazil, as gasoline is being sold for at least R$7 in twenty Brazilian states. In summary, a large part of the value comes from taxes charged by the federal government. Diesel also has a price of R$6, which has been negatively affecting many truck drivers and professionals in the sector. Despite the significant price increases, independent professionals and truck drivers have not manifested through strikes this year.

The price of oil impacts many other sectors of the economy, including market prices and a country’s inflation. This is because market prices take into account the freight costs paid to the company responsible for transportation, affirms the Reuters portal on this Monday, June 6.