US weighs oil sanctions on Venezuela as it steps up pressure

Venezuelan opposition leader Juan Guaido declared himself interim president on Wednesday, winning the backing of Washington and many Latin American nations and prompting socialist Nicolas Maduro to break relations with the United States.
With street protests against Nicolas Maduro under way across Venezuela, US President Donald Trump called socialist Maduro's government "illegitimate".
With street protests against Nicolas Maduro under way across Venezuela, US President Donald Trump called socialist Maduro's government "illegitimate".PHOTO: REUTERS

WASHINGTON (REUTERS) - The Trump administration ratcheted up pressure on Venezuela's President Nicolas Maduro on Wednesday (Jan 23), signalling potential new sanctions against its vital oil sector as it recognised the country's opposition leader as interim president.

With street protests against Mr Maduro under way across Venezuela, US President Donald Trump said the United States recognised Mr Juan Guaido, head of the opposition-controlled National Assembly congress, as the country's leader, and called socialist Maduro's government "illegitimate". In response, Mr Maduro said he was breaking diplomatic relations with the US and giving US embassy personnel 72 hours to leave Venezuela. Contacts have already been severely limited in recent years.

A senior US official, speaking on condition of anonymity, warned Mr Maduro and his loyalists that Washington was ready to ramp up oil, gold and other sanctions and take unspecified actions "if they choose to harm any of the National Assembly members or any of the other duly legitimate officials of the government of Venezuela".

Asked whether he was considering US military intervention, Mr Trump told reporters: "We're not considering anything, but all options are on the table."

Venezuelan opposition sympathisers had been urging Mr Guaido to assume the presidency since Mr Maduro was inaugurated for a second term on Jan 10, following a widely boycotted election last year that many foreign governments characterised as fraudulent.

Formal US recognition of Mr Guaido could be complicated, however, by questions of how to deal with Venezuela's US-based diplomats and who would now control its bank accounts and other US assets, which include Citgo, the US refining arm of Venezuela's state-run oil company PDVSA.

The senior administration official told reporters that Washington now regards Mr Guaido and the National Assembly as the "legitimate decision-makers" in transactions between the US and Venezuela and that there would be a "whole bunch of consequences" but declined to elaborate.

US recognition of Guaido could also backfire if Maduro, who accused the opposition of attempting a coup, used it as a pretext to detain him or other opposition figures.

 
 
 

After Mr Trump's announcement, most major Latin American countries made similar moves and a Canadian official said Ottawa would also follow suit. But leftist-governed Mexico said it continued to recognise Mr Maduro as president.

"@NicolasMaduro has undertaken a fight with the US & international community he has no chance of winning," US Senator Marco Rubio said in a message on Twitter.

Mr Rubio, who led a delegation of Florida lawmakers to discuss Venezuela with fellow Republican Trump on Tuesday, is considered to have played a major role since Mr Trump took office in convincing him to take a tougher stand against Mr Maduro.

NEW OIL SANCTIONS

Multiple sources said the Trump administration could impose new US sanctions on Venezuela's oil industry as soon as this week.

US officials are considering a range of potential measures, including restricting US imports of Venezuelan oil or even a full ban, but no final decisions have been made, two people familiar with the matter told Reuters.

Two other sources briefed on the matter said the Trump administration informed US energy companies of its deliberations.

The decision on whether to go ahead could depend on how harshly Mr Maduro cracks down on protesters and how he responds to Mr Guaido's swearing-in, several of the sources said.

Even then, the administration would likely hold further discussions that could delay any final move, one source said.

The Trump administration has been increasingly frustrated with existing sanctions on Venezuela, which have so far spared oil exports. Targeting oil shipments to the US could choke off significant revenue to the Opec member nation.

The US has held off on broad, oil-related measures, mindful of the potential not only for deepening the hardships of the Venezuelan people but also the risk of causing problems for US companies and consumers.

US refiners such as Valero Energy Corp, Chevron Corp and PBF Energy Inc have had discussions about the possibility of such sanctions with the Trump administration in recent weeks.

Venezuelan crude exports to the US last year fell 15 per cent to the lowest annual average in nearly three decades, according to Refinitiv Eikon data.

Still, some US refineries have equipment specifically designed for heavy grades of crude like those from Venezuela. They imported about 500,000 barrels per day last year, according to the US Energy Information Administration.