What Happened: In a letter last month, the United States authorized Italy's Eni and Spain's Repsol to resume oil shipments from Venezuela's state-owned energy company PDVSA under the debt-for-oil schemes that the two companies took before Washington tightened sanctions on Venezuela in 2020, Reuters reported June 6. Repsol and Eni could resume shipments as early as July, although the volume reportedly will not be large.

Why It Matters: The debt-for-oil swaps will likely have a negligible impact on global oil and gas prices and will fulfill only a small portion of Europe's need to diversify its oil imports away from Russia. Additionally, the U.S. government most likely will require the Venezuelan government to make political concessions during talks with the opposition in return for sanctions relief that would result in increased revenue for Caracas, such as an expanded license for oil exports. These concessions could include binding measures to restore opposition party cards or release political prisoners, and they also could include more nebulous promises to take democratic measures ahead of Venezuela's 2024 general election.

Background: The decision to allow debt-for-oil swaps is part of the Biden administration's plan to incrementally ease sanctions pressure on Venezuela in exchange for equal political concessions from Venezuela's Maduro regime, likely in an effort to increase democratic principles ahead of the 2024 Venezuelan general election. Additionally, the Biden administration is likely attempting to help Europe decrease its dependency on Russian oil and gas ahead of a scheduled phase-out of the country's oil exports.