What Happened: Venezuela's state-owned oil and natural gas company PDVSA suspended crude shipments under oil-for-debt swaps with two European oil companies (Italy's Eni and Spain's Repsol), Reuters reported Aug. 12. Instead, PDVSA asked the companies to exchange shipments of Venezuela's heavy crude with lighter-grade diluents, though this would require the United States to grant a new license for Eni and Repsol.

Why It Matters: While the United States may push Venezuelan President Nicolas Maduro's government to return to negotiations with the Venezuelan opposition in exchange for the authorization of fuel swaps with European oil companies, Washington may be willing to grant the authorization without this stipulation in an effort to assist the European Union's efforts to scale back its imports of Russian oil by February 2023. Should the United States grant Venezuela-Europe fuel swaps, PDVSA would be able to use European diluents to increase production in the Orinoco Oil Belt, which would ease fuel shortages in both Venezuela and Cuba. The resumption of the oil swaps would likely slightly ease both Spain and Italy's reliance on Russian oil imports should natural gas prices rise once Europe enters into more energy-intensive winter months.

Background: In June, the United States authorized Eni and Repsol to resume oil shipments from PDVSA under the debt-for-oil schemes that ended when Washington tightened sanctions on Venezuela in 2020.