Nearly six weeks after imposing sweeping sanctions on PDVSA, Venezuela's state-owned oil company, and apparently no closer to removing President Nicolas Maduro from office, the Trump administration is considering additional actions, including secondary sanctions that could impact nearly all crude and refined product flows in and out of the South American nation, sources said.
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"We're going to expand the net," said Elliott Abrams, the US Department of State's special representative for Venezuela, during a Senate foreign relations subcommittee hearing Thursday.
Abrams said the US is readying more sanctions on financial institutions, including banks that facilitate crude and refined product trading with PDVSA, as well as additional sanctions and visa revocations of individuals connected to the Maduro regime.
Sources said the Trump administration is also weighing secondary sanctions, which would target crude and refined product flows between PDVSA and non-US entities, similar to the current US sanctions on Iranian crude.
"The oil sanctions were imposed weeks ago and I think the administration expected Maduro to have fallen by now," said Lisa Viscidi, director of energy, climate change and extractive industries at Inter-American Dialogue. "Venezuela is struggling to find buyers for its crude oil, but it is still getting shipments into India and Europe so pressuring other countries and banks to more strictly impose US sanctions is one of the few options left."
During Thursday's hearing, Senator Bob Menendez, Democrat-New Jersey, said he soon planned to introduce legislation that would encourage US allies to impose their own sanctions on Venezuela's oil sector, and also on debt, gold and crypto-currencies.
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"We need more nations to step up," Senator Cory Gardner, Republican-Colorado, said.
Amy Myers Jaffe, director of the Council on Foreign Relations' energy security and climate program, said the US would likely target shipments of gasoline from Europe to Venezuela.
"The Shah of Iran fell because there was no fuel for the military," Jaffe said. "You could stop the government in its tracks if they can't get fuel."
In a statement Wednesday, John Bolton, President Trump's national security adviser, said the US was "putting foreign financial institutions on notice that they will face sanctions for being involved in facilitating illegitimate transactions that benefit Nicolas Maduro and his corrupt network."
"We will not allow Maduro to steal the wealth of the Venezuelan people," Bolton said.
Kevin Book, managing director at ClearView Energy Partners, said Bolton's statement was aimed at preventing the Maduro regime from accessing or liquidating Venezuelan assets held overseas.
But, Book said, he anticipated additional oil-related actions from the US, including secondary sanctions and potentially moving up the deadline banning dollar transactions with PDVSA. On February 1, the Department of the Treasury announced that transactions between non-US firms and PDVSA which involve the US financial system or US commodity brokers would be prohibited after April 28.
On January 28, Treasury unveiled sweeping sanctions on PDVSA, setting an immediate ban on US exports of diluent to Venezuela and requiring payments made to PDVSA to be through blocked accounts, setting up a de facto ban on US imports of Venezuela crude. The US, and dozens of other nations, recognize opposition leader Juan Guaido as Venezuela's legitimate president.
S&P Global Platts Analytics forecasts that US sanctions will cause Venezuelan crude output, which averaged about 1.2 million b/d in January, to fall to 825,000 b/d in the fourth quarter of this year and then to fall to an average of 750,000 b/d in 2020.
Venezuela produced 1.10 million b/d in February, down 60,000 b/d month on month, according to an S&P Global Platts survey released Thursday.
Venezuela's oil production has fallen 910,000 b/d in two years and is at its lowest point since an industry strike in late 2002 and early 2003, according to Platts survey data.
-- Brian Scheid, firstname.lastname@example.org
-- Edited by Keiron Greenhalgh, email@example.com