U.S. Officials Mulling Over Sanctions Against Venezuela’s Oil Sector

U.S. Officials Mulling Over Sanctions Against Venezuela’s Oil Sector

Reuters has reported that President Donald Trump’s administration has started to think about possible sanctions against Venezuela’s lucrative oil sector. The sanctions would include PDVSA, the country’s state oil company.

Venezuela continues to see protests against socialist President Nicolás Maduro, but he keeps cracking down on the opposition to keep his power. His policies have decimated the oil rich country, which have left the people starving and without proper medical care.

A strike to Venezuela’s top economic source would surely decimate his administration. The country “relies on oil for some 95 percent of export revenues.” This means the administration must proceed with caution.

Possible Sanctions

Reuters reported:

But they made clear that the administration is moving cautiously, mindful that if such an unprecedented step is taken it could deepen the country’s economic and social crisis, in which millions suffer food shortages and soaring inflation. Two months of anti-government unrest has left more than 60 people dead.

Another complicating factor would be the potential impact on oil shipments to the United States, for which Venezuela is the third largest oil supplier after Canada and Saudi Arabia. It accounted for 8 percent of U.S. oil imports in March, according to U.S. government figures.

“It’s being considered,” one of the officials told Reuters, saying aides to President Donald Trump have been tasked to have a recommendation on oil sector sanctions ready if needed.

“I don’t think we’re at a point to make a decision on it. But all options are on the table. We want to see the bad actors held to account.”

Trump’s administration could enforce a “blanket ban on Venezuelan oil imports.” The sanctions could also stop “PDVSA from trading and doing business in the United States.” This decision will “have a severe impact on PDVSA’s U.S. refining subsidiary Citgo.”

But a smaller approach could “bar PDVSA only from bidding on U.S. government contracts.” Former President Barack Obama passed sanctions like that in 2011 to punish Venezuela for its dealings with Iran, but decided to repeal those after the nuclear deal with Iran.

Impacts of Sanctions

The sanctions could backfire, though, and bring more suffering for the Venezuelans. Reuters continued:

U.S. officials recognize, however, that oil sanctions on Venezuela could exacerbate the suffering of the Venezuelan people without any guarantee of success against Maduro, who accuses Washington and Venezuelan opposition of fomenting an attempted coup.

Given the potential for regional spillover, any decision on oil sanctions would require consultation with Venezuela’s neighbors, the officials said.

“The concern we have is that it will be a very serious escalation,” one official said. “We’d have to be prepared to deal with the humanitarian consequences of essentially collapsing the government.”

Maduro’s government has been hit hard by its heavy reliance on oil, whose price has collapsed in recent years, and is accused by the opposition of severely mismanaging the economy.

Past Sanctions

Last month, the Trump administration delivered more sanctions against Venezuela to include members of the Supreme Court. From Yahoo! News:

The sanctions add eight members of Venezuela’s Supreme Court — including its president, Maikel Moreno — to the Treasury Department’s Office of Foreign Assets Control list , which is reserved for countries and individuals accused of crimes such as drugs and weapons trafficking, as well as perceived threats to national security. These individuals will have their assets frozen, be blacklisted from doing business with U.S. citizens and barred from U.S. entry.

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