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Washington — The US continues to consider sanctions on Venezuelan oil exports, potentially complicating a major source of crude for US Gulf Coast refiners, as key Trump administration officials on Tuesday backed the country's opposition and its leadership.

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"Discussions [on oil sanctions] are ongoing," one White House source said Tuesday.

A White House principals meeting is being planned for this week to discuss the US' path forward on Venezuela, according to a source. The meeting, likely to involve officials from the White House National Security Council and National Economic Council and cabinet agencies such as the Department of State and Department of Energy, is expected to include discussions on sanctions on US imports of Venezuelan crude, this source said.

Senators Rick Scott and Marco Rubio, both Republicans, plan to meet with President Donald Trump on Tuesday to discuss the crisis in Venezuela and the administration's planned response, according to a Rubio spokesman. Rubio has previously called for oil sector sanctions on Venezuela, but the spokesman said it is unclear if oil sanctions will be discussed during the meeting with Trump.

White House NSC officials earlier this month told some US refiners that sanctions on Venezuelan crude exports were under consideration, sources said. The Trump administration has long resisted such sanctions, partly due to the potential economic impact on domestic refiners.

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Sources said such sanctions could be triggered by President Nicolas Maduro's response to opposition protests scheduled to begin Wednesday.

"The list of catalysts is getting longer every day," one analyst said.

US OPPOSITION SUPPORT

In a video message released by the White House Tuesday, US Vice President Mike Pence offered support to the Venezuelan people and opposition leader Juan Guaido.

"The United States joins with all freedom-loving nations in recognizing your National Assembly as the last vestige of democracy in your country, for it is the only body elected by you, the people," Pence said.

In a tweet Tuesday, US Secretary of State Mike Pompeo called the National Assembly "Venezuela's only valid democratically elected body."

In addition to sanctions on Venezuelan crude exports, sources say the administration is considering multiple options on Venezuela, including recognition of an alternative government to Maduro's; declaring Venezuela a state sponsor of terrorism; and sanctions on oil services companies or diluent exports to Venezuela.

US imports of Venezuelan crude averaged about 574,000 b/d in December, down roughly 40% from July 2016, when US refiners imported more than 850,700 b/d, according to US Customs and Border Protection data. US imports of Venezuelan crude fell as low as 409,150 b/d in February 2018, the data show.

Venezuelan oil output fell to 1.17 million b/d in December, according to the latest S&P Global Platts survey. The South American country's output is forecast to decline by 350,000 b/d through 2019, but, depending on sanctions and other risk factors, could fall by as much as 800,000 b/d by late this year, according to a Friday note from Barclays.

VENEZUELAN DEMAND?

US refiners have been pressing the Trump administration to not impose sanctions, arguing, in part, that they will have limited impact, since Venezuela can simply redirect its oil exports, primarily to markets in Asia.

But such a shift in global oil flows will likely be "lumpy" as payments would need to be negotiated and refinery testing would need to take place, according to Michael Cohen, head of energy markets research at Barclays.

In addition, demand for Venezuelan heavy crude may be limited, Cohen said.

If strict sanctions go into place, markets could be found for the roughly 500,000 b/d of Venezuelan crude now sent to the US, according to Francisco Monaldi, a fellow in Latin American Energy Policy at Rice University's Baker Institute for Public Policy.

But that crude will be sold at a discount, partly due to transportation costs, and will likely be sold mostly in India and China where oil exports are used largely to repay loans and do not generate cash for PDVSA, Monaldi said.

-- Brian Scheid, brian.scheid@spglobal.com

-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com