U.S. said to weigh Venezuelan oil sanctions before April vote

By Nick Wadhams on 2/27/2018
WASHINGTON (Bloomberg) -- The U.S. is leaning toward imposing oil-sector sanctions on Venezuela before the country holds April 22 elections that opposition leaders have vowed to boycott, according to a senior State Department official.

The official, who asked not to be identified discussing private talks, stressed that no decision has been made and the U.S. is still weighing the impact such sanctions would have on ordinary Venezuelans as well as on U.S. refiners that import heavy Venezuelan crude.

Nonetheless, the Trump administration favors a move as soon as feasible, regardless of the election timing, the official said. A move to directly target oil sales would be the most significant blow to President Nicolas Maduro’s regime, which depends almost exclusively on crude sales to sustain a crumbling economy. 

Secretary of State Rex Tillerson, who is overseeing the debate, still hasn’t decided what form the sanctions will take, but is weighing two main options, according to the official: new restrictions specifically targeting Venezuela’s oil sector; or measures to tighten existing financial sanctions and thereby make it impossible for the autocratic regime to profit from its chief source of income.

The possibility of such sanctions was a focus of Tillerson’s trip to South America and the Caribbean earlier this month. During a stop in Jamaica, Tillerson said the U.S. was studying what it could do to “perhaps soften any impact” of such sanctions, particularly on poorer Caribbean nations.

Maduro, 55, is seeking another six-year term for what he calls his “21st century socialism,” which has spawned the worst economic crisis in the country’s history. Opposition leaders argue that Venezuela’s election authority is stacked with Maduro loyalists and their candidates have been unfairly banned from the ballot.

The consideration of sanctions represents a shift for Tillerson, who argued against them as chief executive officer of ExxonMobil. But President Donald Trump supports the idea, and the U.S. has largely run out of other options to pressure Maduro’s regime, which has insisted that it will go ahead with the April 22 vote.

As part of its campaign to raise pressure on Maduro after accusations of electoral abuses and human-rights violations, the Trump administration has already imposed sanctions on more than a dozen top officials -- including the president himself. The senior State Department official said Venezuela should also expect that the U.S. Treasury Department will announce a new list of individuals to be included on the sanctions list.

Venezuela, which holds the world’s largest oil reserves, has seen a steady decline in production amid lack of money for maintenance and exploration. Venezuela imports about 2 MMbbl of heavy naphtha per month, and all of it comes from U.S. Gulf refiners, according to data compiled by Bloomberg.

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