President Donald Trump said this week that the United States is preparing to impose further sanctions on the Venezuelan oil industry—one of the chief sources of income for President Nicolás Maduro‘s authoritarian regime as it continues to cling to power.
The news came less than a week after the Trump administration announced sanctions against Geneva-based but Russian-controlled oil brokerage Rosneft Trading S.A., which U.S. officials say has been helping the Venezuelan regime to skirt the American oil embargo by acting as an intermediary to supply Venezuelan oil to third parties in Asia.
“You’ll be seeing something on that in the not-too-distant future,” Trump said at a news conference in New Delhi as his recent trip to India came to a close. “There here could be very serious sanctions.” When pressed, the President indicated that further sanctions were on the way. “You are going to see in a little while. You are asking a question right in the middle of us doing something,” he said.
The comments also increased speculation that the Trump administration might choose to focus some of its attention closer to home. The Treasury Department recently granted Chevon its fourth waiver to source crude oil from Venezuela since sanctions were announced in 2018. Chevron’s current waiver expires on April 22, and a report from Bloomberg this week questioned whether it would be renewed by the Treasury, although supporters of the American oil giant argue that if Chevron were to exit Venezuela after almost a century of activity there, any void left by the company could be filled by Russian or Chinese oil companies keen to expand their control of global crude supplies.
The United States and an alliance of around 60 countries maintain that the reelection of Maduro in 2018 was not a legitimate democratic result, and have recognized the leader of the Venezuelan opposition, Juan Guiadó as interim president. Maduro, a protege of the Marxist former Venezuelan president Hugo Chávez, has continued the socialist policies and rampant corruption of his predecessor, which are widely recognized as having brought ruin to the oil-rich country. Trump has in his press conference said that Venezuela was “wealthy 15 years ago and very wealthy 20 years ago … the wealthiest in all of South America.” American sanctions aim to prevent the Maduro regime from continuing in power.
According to the U.S. Department of State, “The former regime of Nicolás Maduro has consistently violated and abused the human rights and dignity of the country’s citizens, plundered its natural resources, and driven a once-prosperous nation into economic ruin with Maduro’s authoritarian rule and ruinous economic policies. Maduro’s thugs have reportedly engaged in killings and physical abuse, detained political opponents, and severely interfered with the exercise of freedom of expression, all in a brutal effort to retain power.”
A recent press release from U.S. Secretary of State Mike Pompeo said that “As the primary broker of global deals for the sale and transport of Venezuela’s crude oil, Rosneft Trading has propped up the dictatorial Maduro, enabling his repression of the Venezuelan people. Maduro has destroyed Venezuela’s institutions, economy, and infrastructure, while enriching himself and his cronies, through his abuse of state power and his welcoming of malign support from Russia, as well as from Cuba, Iran, and China.”
Under the regime, Venezuela’s currency, the bolivar, has lost 99 percent of its value and is widely considered to be worthless. Medicine is in extremely short supply even as infant mortality soars, and some estimates from 2018 indicated that only 55 percent of Venezuelan citizens were eating three meals a day. Against this background, U.S. sanctions have targeted corrupt officials and companies such as Petroleos de Venezuela, S.A. (PdVSA), Venezuela’s state-owned oil and gas company.
According to a statement from the U.S. Department of the Treasury, “U.S. sanctions need not be permanent and are intended to change behavior. The United States has made it clear that we will consider lifting sanctions for those who take concrete, meaningful, and verifiable actions to support democratic order in Venezuela.”
China and India Links
According to a report by Reuters this week, China and India are the most significant importers of Venezuelan oil products. Tanker data obtained by Reuters indicated that between them, two Indian companies had imported up to 342,000 barrels of Venezuelan oil per day in 2019 from Reliance Industries, one of India’s largest private companies and the operator of the world’s largest refinery, and Nayara Energy, in which Rosneft has a substantial interest.
Reuters reported that PdVSA had essentially attempted to circumvent U.S. sanctions by shifting deliveries from Rosneft Trading to another Rosneft associate, Switzerland-based TNK Trading. According to market analysts at S&P Global Platts, the United States is now likely to be preparing a further round of sanctions, this time against TNK.
Reuters reports that Rosneft affiliates siphon Venezuelan crude as repayments on billions of dollars in Russian loans, while also exchanging crude oil exports for imports of refined fuels desperately needed by the Maduro regime.