Trump administration sanctions Venezuela’s state-run oil company

National security adviser John Bolton said the move would block $7 billion in assets of Venezuela’s state-run oil company and result in $11 billion in export losses over the next year. Treasury Secretary Steve Mnuchin added PDVSA has “long been a vehicle of embezzlement [and] corruption.”

“We have continued to expose the corruption of Maduro and his cronies, and today’s action ensures they can no longer loot the assets of the Venezuelan people,” Bolton said at a White House press briefing.

The sanctions stop short of a total embargo on Venezuelan oil.

“The sanctions were announced in a way that helps shield the administration from being blamed by the average Venezuelan,” George David Banks, President Trump’s former international energy adviser, told the Washington Examiner. “There’s a difference between the U.S. saying we are not going to buy your product period, and the U.S. saying we will buy your product but not give the proceeds to a morally corrupt regime.”

But energy industry experts say the impact could be the same because Maduro would likely not allow oil to be sold to U.S. refiners if he can’t use the revenues and would turn to alternative buyers, such as Russia and China.

“It is the same as an import ban for refiners,” Joseph McMonigle, a former chief of staff at the Energy Department in the George W. Bush administration, told the Washington Examiner.

The Trump administration has long debated restricting oil from Venezuela, whose heavy crude is used in large amounts by refiners in Texas and Louisiana such as Citgo and Valero.

The administration held off, however, realizing refiners built to process heavy oil — before the U.S. became a dominant producer of light sweet crude during the shale boom — would struggle to find replacement sources, even though they have tried.

But the stakes changed after the Trump administration last week recognized Guaido, the oil-rich country’s opposition leader, as Venezuela’s official head of state, in a rebuke of Maduro, whose political oppression and economic policies have created food shortages and a public health crisis.

The administration hopes the new sanctions encourage the “expeditious transfer of control” of Venezuela’s oil assets to the opposition or a “subsequent, democratically elected government.”

Oil production has already crashed in Venezuela in recent years because of the political turmoil.

The U.S. is less dependent on Venezuelan oil, importing less than 500,000 barrels a day, down from more than 1 million barrels per day a decade ago.

Mnuchin said Monday that U.S. Gulf Coast refiners, anticipating sanctions, have already reduced “dependence” on Venezuelan oil.

He projected little impact on U.S. oil and gas prices, noting that prices have dropped during the Trump administration. He said oil already paid for by U.S. refiners, and in the process of being shipped at sea, is exempt from the sanctions.

“I don’t expect people will see an impact on the gas pumps,” Mnuchin said at the White House press briefing. “We been very careful in making sure these costs do not impact the American consumer.”

McMonigle said the reality is likely more complicated with alternative sources of heavy crude strained. The Canadian province of Alberta has forced producers of heavy crude to cut back because of a supply glut, and Saudi Arabia has begun reducing supply of its heavy crude as it begins implementing an OPEC pact with Russia to cut production in order to raise low oil prices.

“The Trump administration is trying to put a happy face on this,” McMonigle said. “It’s definitely going to be a big impact on U.S. refiners who will have to scale back their operation in the U.S. unless they can find other sources of medium to heavier crude. That in itself will have an impact on gasoline prices.”