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U.S. Imposes Financial Sanctions on PDVSA

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PDVSA loading terminal (file image)

By The Maritime Executive 2019-01-28 21:16:00

The Trump administration has imposed new financial sanctions on Venezuelan state oil firm PDVSA as part of a pressure campaign to oust the government of Venezuelan president Nicolás Maduro. 

The new measures have the potential to affect the pattern of petroleum shipping in the Caribbean and beyond, as the U.S. trades in significant quantities of oil and refined products with Venezuela. About five percent of America's oil imports (500,000 bpd) comes from PDVSA; in the other direction, PDVSA imports American light crude and naphtha for use in diluting its own extra-heavy grades.   

The new sanctions are less punitive than the restrictions on trade with Iran's oil sector, but they will create difficulties for the Venezuelan government, which relies heavily on oil revenue. Under the new sanctions regime, American firms may still import oil from PDVSA, but they cannot pay for it - at least, not immediately. 

Instead, any payments to PDVSA must be held in "blocked accounts," which can only be released to Maduro's political opposition. Parliamentary leader Juan Guaidó recently declared that Maduro's presidency is illegitimate, and he has claimed the title of "interim president," promising to hold new elections once Maduro steps down. Guaidó has the support of the Trump administration and the Organization of American States, both of which have recognized him as Venezuela's legitimate leader. 

“If the people in Venezuela want to continue to sell us oil, as long as that money goes into blocked accounts, we’ll continue to take it. Otherwise we will not be buying it," Mnuchin said during a White House news briefing. “The path to sanctions relief for PDVSA is through the expeditious transfer of control to the interim president or a subsequent democratically elected government."

Senator Marco Rubio (R-FL), a longtime opponent of the Maduro government, hailed the imposition of new sanctions on PDVSA. "The natural resources of  Venezuela belong to its people. But the Maduro crime family steals it and uses the cash from oil exports to buy the 'loyalty' of top military elites," Rubio said. "The money for oil will now go to [the people] through the legitimate government of Juan Guaidó."