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The United States is mulling over more sanctions against Venezuela, but crude oil exports will not be among the sanction subjects, Reuters reports, quoting a Washington official. The source said Venezuela’s oil production is already in a steady decline, suggesting it doesn’t need an additional push to sink to the bottom.
Talk about sanctioning Venezuelan oil exports has been on the table ever since Washington began to step up the pressure on Caracas, blaming it for human rights violations and being responsible for the economic crisis that hit Venezuela when oil prices began falling in 2014. Yet the Trump administration never made good on its threats to sanction oil exports. Now, according to this source, there is no point in doing it.
“The fact is that the greatest sanction on Venezuelan oil and oil production is called Nicolas Maduro, and PDVSA’s inefficiencies,” the official told Reuters. “At the end of the day, Nicolas Maduro has taken care of really running PDVSA to the ground, and essentially more and more making it a non-factor.”
Meanwhile, the Maduro government announced it will stop using U.S. dollars for international transactions and switch to the euro instead. Bloomberg earlier this week quoted a statement from the country’s Vice President in charge of the economy Tarek El Aissami that Venezuela will from now on use only euros and yuan in quotes of foreign exchange auctions. As part of the shift, President Maduro had ordered an injection of 2 billion euro into the Venezuelan forex market.
The shift away from dollars is part of ambitious efforts to restart the Venezuelan economy. Another part is the launch of the petro digital currency that Caracas says is backed by oil and gold reserves. Sales of the petro will start next month and will be made available for trade on six exchanges from November 1 but for private deals. Public sales will begin on November 5, President Maduro said.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.