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The U.S. government is discussing sanctions against Venezuela’s oil industry after yesterday’s Constituent Assembly election that Washington’s UN ambassador Nikki Haley called a “sham”. According to sources who spoke to Reuters on condition of anonymity, punitive measures are unlikely to include a ban on Venezuelan oil exports, but could involve suspending U.S. light crude exports to the South American country.
The Trump administration already announced a fresh round of sanctions against 13 senior Venezuelan government officials last week. When the new round will be made public remains unclear. There is an option of delaying the sanctions in case the situation in Venezuela escalates further. Also, the sources said, the timing and severity of the measures will seek to avoid causing further suffering to the Venezuelan people and protecting U.S. economic interests.
If the U.S. stops importing Venezuelan oil, the Gulf Coast refineries will have a serious shortage of heavy rude on their hands and will need to find alternative sources urgently, which would sharply push up gasoline prices.
Suspending U.S. light crude exports to Venezuela is a more viable option: PDVSA imports crude from the U.S. to mix it with its heavy blends to make oil products. During the first four months of this year, PDVSA imported about 18,750 bpd of U.S. crude oil through Curacao. This is not a huge amount, but cutting it off would make life harder for the state oil company until it finds an alternative.
The Constituent Assembly vote, called by President Nicolas Maduro to amend the constitution, which many see as an attempt to cement himself in power, saw a turnout rate of 41.53 percent or 8 million votes, according to Xinhua. Besides the U.S., Venezuela’s neighbors, including Peru, Chile, Argentina, and Brazil have also called on Maduro to not go ahead with the election but rather focus on dialogue with the opposition.
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.