United States considers hitting Venezuela with oil embargo

The White House National Security Council has told some US refiners that sanctions on Venezuelan crude exports are under consideration, S&P Global Platts reported, citing sources familiar with the issue.

The effort would likely focus on the roughly 500,000 barrels per day (bpd) of crude that Venezuela exports to the United States, according to Joe McMonigle, an analyst with Hedgeye Risk Management.

In October, US refiners imported an average of 505,870 bpd of Venezuelan crude, down from about 629,480 bpd in September.

McMonigle told Platts: “The hawks are in charge now and they want to get tough on Venezuela. If they’re going to do something, they’re going to go for the toughest thing right away.”

Two years ago, the US imposed sanctions prohibiting trading new debt and equity issued by the Venezuelan government and state oil company, PDVSA. The Department of Treasury has also introduced several rounds of restrictions against Venezuelan top government officials. Maduro was among those blacklisted and called it “an honor.”

Earlier this month, the Treasury Department announced a new tranche of sanctions against seven Venezuelan individuals and two dozen business entities.

While sanctions on Venezuelan crude flows are “on the table,” administration officials are still reluctant to impose them since they do not want to be blamed if the sanctions worsen the humanitarian crisis, but do not weaken Maduro’s regime, an unnamed analyst told Platts.

“With Venezuela, it’s you break it, you buy it and they don’t want to buy it right now,” he said.

Statistics from the Energy Information Administration (EIA) showed Venezuela produced 1.25 million bpd of crude in December, down from 1.28 million bpd in November.

“EIA expects Venezuela’s production to continue to fall through the forecast period – albeit at a slower overall rate of decline – while the financial situation of... state-owned PDVSA remains extremely precarious,” it said.

The agency forecasts Venezuelan oil production to fall below 1 million bpd in the second half of 2019 and to about 700,000 bpd in 2020.

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