The Trump administration on Monday imposed sweeping sanctions on Venezuelan state-owned oil firm PDVSA, aimed at severely curbing the OPEC member’s crude exports to the United States and at pressuring socialist President Nicolas Maduro to step down.
Minutes before the announcement, Juan Guaido, the Venezuelan opposition leader who proclaimed himself interim president last week with US backing, said congress would name new boards of directors to the company and its US subsidiary, Citgo.
In response, Nicolas Maduro pledged to retaliate against the US for the new sanctions.
“I have given specific instructions to the head of PDVSA to launch political and legal action, in US and international courts, to defend the property and assets of Citgo”, Maduro said on state television.
“With this move, they are trying to steal Citgo from us, the Venezuelan people. Be on alert, Venezuela!” Maduro said at a ceremony welcoming home diplomats recalled from Washington following the US decision to recognize opposition Guaido as the acting president.
Guaido, supported by the United States and most countries in the Western Hemisphere, says Maduro stole his re-election and must resign to allow new, fair polls.
Three sources with knowledge of the decision told Reuters that PDVSA had ordered customers with tankers waiting to load Venezuelan crude bound for the United States to prepay for the cargoes or they will not receive authorization to fill the vessels or leave the ports.
The Trump administration sanctions stopped short of banning US companies from buying Venezuelan oil, but because the proceeds of such sales will be put in a “blocked account,” PDVSA is likely to quickly stop shipping much crude to the United States, its top client.
“If the people in Venezuela want to continue to sell us oil, as long as the money goes into blocked accounts we will continue to take it, otherwise will we not be buying it,” Treasury Secretary Steven Mnuchin said at a White House briefing.
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Oil at sea, already paid for, would continue its journey to the United States, he said. White House national security adviser John Bolton said at the briefing the measure would cost Maduro $11 billion in lost export proceeds over the next year and block him from accessing PDVSA assets worth $7 billion.
While there are significant exceptions, such as rules that should allow Citgo to keep using Venezuelan crude in US refineries, the sanctions will likely cause some reordering of global oil flows as Venezuela seeks to sell elsewhere.
Gulf refineries that use Venezuela’s heavy crude will have to look for alternatives to replace supplies. Despite a sharp decline in oil exports due largely to mismanagement of the industry and the economic crisis, Venezuela remains the fourth-biggest vendor of oil to the United States, supplying some 500,000 barrels per day.
Other exceptions will make it easier for Chevron Corp to keep operating a joint venture in Venezuela, and allow US entities in Venezuela to keep buying PDVSA gasoline.
Countries around the world have recognized Guaido, the National Assembly speaker, as Venezuela’s rightful leader, and the United States vowed to starve Maduro’s administration of oil revenue after he was sworn in on January 10 for a second term that was widely dubbed illegitimate.
Maduro has promised to stay in office, backed by Russia and China, which have bank rolled his government and fought off efforts to have his government disavowed by the United Nations.
Bolton reiterated that Maduro would be held responsible for the safety of US diplomatic personnel in Venezuela as well as Guaido and other opposition figures.