WASHINGTON/HOUSTON, April 17 (Reuters) - The U.S. will

not renew a license set to expire on Thursday that had broadly

eased Venezuela oil sanctions, moving to reimpose punitive

measures in response to President Nicolas Maduro's failure to

meet certain election commitments, senior U.S. officials said.

Just hours before the deadline, the U.S. Treasury Department

announced on its website that it had issued a replacement

license giving companies 45 days to "wind down" their business

and transactions in the OPEC country's oil and gas sector.

Washington had repeatedly threatened in recent months to

reinstate energy sanctions unless Maduro made good on his

promises that led to partial U.S. sanctions relief from

October, following an election deal reached between the

government and the Venezuelan opposition.

The sweeping sanctions on Venezuela's oil industry were

first imposed by the Trump administration in 2019 following

Maduro's re-election victory, which the U.S. and other Western

governments rejected.

While Maduro has met some commitments under last year's

deal, he has failed to meet others, including allowing the

opposition to run the candidate of its choice against him in the

July 28 presidential election, the officials told reporters on

Wednesday.

As a result, the Biden administration plans to allow the

current six-month general license to expire without renewal just

after midnight EDT (0500 GMT on Thursday), the officials said

on condition of anonymity.

"The areas in which they have fallen short include the

disqualification of candidates and parties on technicalities and

what we see as a continued pattern of harassment and repression

against opposition figures and civil society," one official

said.

The withdrawal of the most significant element of U.S.

sanctions relief marks a major step back from U.S. President Joe

Biden's policy of re-engagement with the Maduro government.

The Biden administration, however, is stopping short of a

full return to the "maximum pressure" campaign waged under

former U.S. President Donald Trump.

Weighing on the U.S. decision have been concerns about

whether reimposing sanctions on Venezuela's energy sector could

spur higher global oil prices and increase the flow of

Venezuelan migrants to the U.S.-Mexico border as Biden campaigns

for reelection in November.

STRUGGLE TO CRAFT SANCTIONS DECISION

Biden's aides had struggled in internal deliberations to

craft an approach that would punish Maduro but not hurt U.S.

interests with the expiration of the license that has allowed

Venezuela to freely sell its crude, U.S. sources said.

Venezuelan officials have insisted they are ready for any

scenario and can weather renewed U.S. oil sanctions.

"We are prepared commercially," Oil Minister Pedro Tellechea

told reporters earlier on Wednesday at the Caracas headquarters

of state oil firm PDVSA. "Logistically, we will continue

producing."

Some companies, he said, may be reluctant to invest in the

face of Washington's "unilateral measures" but most will

continue.

Venezuela's oil exports in March rose to their highest level

since early 2020 as customers rushed to complete purchases ahead

of the predicted expiration of the license, Reuters reported

this month.

Since the easing of sanctions in October, however, Venezuela

has made only slow progress toward rebuilding its production

capacity, with its crippled infrastructure and lack of fresh

investment continuing to place limits on what it can achieve.

The Biden administration is leaving open the possibility

that it could eventually temper its response. One U.S. official

said the latest action "should not be viewed as a final decision

that we no longer believe Venezuela can hold competitive and

inclusive elections," adding that Washington would continue to

engage with Maduro's representatives.

Any activity under the expiring license will have to be

completed by May 31, but companies can still revert to applying

individually for specific licenses, the officials said. Securing

approval will depend on how permissive the U.S. decides to be.

Certain U.S. authorizations separate from the expiring

license will be untouched, including permission given to Chevron ( CVX )

since 2022 to sell oil in the U.S. from its Venezuela

joint ventures as well as existing approvals for European firms

to take Venezuelan oil.

Among the top U.S. concerns about Venezuela's electoral

conditions has been the crackdown on Maduro's political

opponents.

"We were particularly concerned by the fact that the

Venezuelan authorities also blocked the leading opposition

candidate Maria Corina Machado from running," one U.S. official

said.

Venezuelan authorities have maintained an election ban on

Machado, who resoundingly won the opposition primary last

October, and the opposition is currently holding internal

negotiations about who could run as a substitute.

The U.S. has also decried a string of arrests in recent

months of opposition politicians and activists.