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Washington — The US is still considering secondary sanctions on Venezuelan oil exports, but is likely to delay implementation as it attempts to push Iranian crude and condensate exports to zero, analysts said Monday.

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"I think it makes them less likely, at least for some time," Francisco Monaldi, the Latin American energy policy fellow at Rice University's Baker Institute for Public Policy, said.

In a note Monday, analysts with ClearView Energy Partners said that secondary sanctions on Venezuela, which would explicitly prohibit trade between PDVSA and non-US companies, have "become less likely, at least for a while."

Those secondary sanctions, which Trump administration officials have been increasingly considering as Venezuelan President Nicolas Maduro has remained in power, may be postponed until Saudi Arabia and the US significantly increase their crude exports, analysts said. Trump administration officials said Monday that Saudi Arabia will boost oil output and exports as the US allows sanctions waivers for Iran's biggest oil and condensate buyers to expire on May 2.

"We think the market is well supplied and will continue to be well supplied," Francis Fannon, assistant secretary at the US State Department's Bureau of Energy Resources, said in a call with reporters Monday.

Fannon said the US was still considering "ways to increase pressure on Maduro," but declined to comment on secondary sanctions for Venezuela.

Even before Monday's announcement, secondary sanctions on PDVSA were not expected to be imposed until after April 28, when prohibitions on trade in dollars with PDVSA are set to take effect. If imposed, secondary sanctions would cause Venezuelan crude output to fall to 500,000 b/d by the fourth quarter of 2019 and to 375,000 b/d by the end of 2020, according to S&P Global Platts Analytics.

Venezuela's oil output in March averaged 740,000 b/d, a 16-year low, due to power outages and sanctions, according to the latest Platts OPEC survey.

Over the past two weeks, the US has ramped up pressure on Cuba, which it has accused of propping up the Maduro regime, by sanctioning vessels and companies it argues are facilitating crude and refined product trade between the two countries. Last week, it sanctioned Venezuela's central bank.

In announcing the end of Iran sanctions waivers Monday, US Secretary of State Mike Pompeo also linked Iran with Venezuela.

"We watch as Iran continues to try and have a role in protecting Maduro in Venezuela," Pompeo said. "This is causing countries in South America to understand that the expeditionary nature of the Islamic Republic is something that threatens citizens all across the world."

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

-- Edited by Pankti Mehta, newsdesk@spglobal.com

S&P Global Platts Insight | April 2019 | Shape Shifting: US power markets

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