The Biden administration is preparing to ease sanctions on Venezuela's government to allow Chevron Corp. CVX 0.57% to resume pumping oil there, according to people familiar with the proposal, paving the way for a potential reopening of US and European markets to Venezuelan oil exports.

The sources added that in exchange for the massive sanctions relief, Venezuelan President Nicolas Maduro's government would resume long-stalled discussions with the country's opposition to discuss the conditions for the 2024 presidential elections.

The US and Venezuela's government have worked out a deal that would free up hundreds of millions of dollars in Venezuelan state funds that had been frozen in American banks to pay for food, medicine, and equipment for the country's battered electricity grid and municipal water systems.

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Details are still being worked out, according to US officials, who emphasized that the arrangement might fall through if discussions will the opposition are not held.

The deal, if it goes through, will pave the way for Chevron and US petroleum services companies to resume Venezuelan oil exports to the global market amid soaring energy prices across the world.

Venezuela was a major oil producer in the 1990s, pumping more than 3.2 million barrels per day, but the output was reduced due to draconian sanctions imposed by the Trump administration, which also drove Western corporations out of the nation.

Any change in US policy that brings back Western oil corporations will convey a psychological signal to the market that greater supply is on the way, according to the sources. The US set its eyes on Venezuela after OPEC+ countries led by Saudi Arabia and Russia agreed to cut output in response to falling oil prices, infuriating the Biden administration.

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However, engaging Venezuela, which has some of the world's largest oil reserves, could serve as a longer-term strategy for the United States and European countries seeking new energy sources as the war in Ukraine drags on and upends commodity markets, according to Francisco Monaldi, a Latin America energy expert at Rice University.

“If [oil] prices come down, this all could change,” Monaldi said. “But for now, this is their obsession.”

Last month, Vice President for Western Hemisphere Affairs Brian Nichols testified before Congress on September 15 that if Venezuelan President Nicolas Maduro refuses to enter into formal negotiations with the nation's US-backed opposition, the United States is prepared to reimpose sanctions and take other comprehensive steps, reflecting the rather true US intent for the region as it tries to impose its own interests and dictations across the world. 

"We stand ready to snap back sanctions and ready to take comprehensive measures," Nichols told the US Senate Foreign Relations Committee in response to questions over what the lawmakers said was the Biden administration's slow and feckless diplomatic efforts in Venezuela.

In addition to law enforcement action, working with partners and allies to prevent the Venezuelan President from accessing frozen assets and supporting fact-finding missions by international organizations like the International Criminal Court are some of the planned or implemented measures regarding Venezuela, according to Nichols.

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