The Trump administration is looking to tighten oil sanctions on Venezuela in the near future, top U.S. envoy for the country told Reuters on Monday, by potentially removing exemptions that allow some oil companies to exchange Venezuelan crude for fuel from the OPEC member.
U.S. President Donald Trump has ramped up sanctions on Venezuela’s state-run PDVSA, its key foreign partners and customers since it first imposed measures against the company in early 2019, seeking to oust the left-leaning Venezuelan President Nicolas Maduro after a 2018 re-election considered a sham by most Western countries.
“We think our sanctions have been extremely effective in reducing income to the regime but we think we can make them more effective. So we are going to be doing some things to tighten up in the near future,” Elliott Abrams, U.S. Special Representative for Venezuela, said in a phone interview.
The sanctions have already deprived PDVSA of most of its long-term oil customers, reducing oil exports to below 400,000 barrels a day, their lowest level in almost 80 years.
But they have so far failed to loosen Mr. Maduro’s grip in power – something that has frustrated Mr. Trump, officials say. With November’s presidential election approaching, Washington is preparing to toughen its stance on Venezuela, especially the sanctions on its oil and gold industries.
Reuters reported earlier this month that Washington was moving to set an October deadline for winding down all trade of Venezuelan oil – such as swaps of crude for fuel, including diesel, and payments of pending debt with crude, the sources said.
Mr. Abrams declined to confirm the exact scope of the action but said, “There are some exceptions that were put in place last year that we have been looking at and that we may feel can be removed.”
A handful of European and Asian customers have continued taking Venezuelan oil under specific authorizations granted since last year by the U.S. Treasury for transactions that do not involve cash payments to Mr. Maduro’s administration, but rather exchanges of Venezuela oil for diesel.
The list of active receivers of Venezuelan oil includes Italy’s Eni, Spain’s Repsol, India’s Reliance Industries and Thailand Tipco Asphalt.
Some Venezuelan opposition activists and economists have raised alarms about the potential humanitarian impact of a cut off of diesel swaps, given that the fuel is used to transport food and run electricity generators.
Mr. Abrams rejected the criticism, saying the United States was always careful about the humanitarian impact of its sanctions and questioned how Caracas was able to send fuel to Cuba.
“If there are shortages of diesel in Venezuela, they can be remedied by stopping this colonial relationship with Cuba,” he said.
PDVSA regularly exports Venezuela crude and fuel oil to Cuba, and also re-ship to the island a portion of the refined products it imports through swaps.
The Trump administration has clamped down on Cuba after the historic move by Democratic predecessor Barack Obama to reopen U.S.-Cuba ties.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.