Venezuela’s national oil company is scrambling to craft a Plan B if President Trump decides to ban imports from the country.
The plan is being devised after Trump on Monday imposed sanctions on President Nicolas Maduro after holding elections in an effort to rewrite the Constitution and secure his place as president indefinitely.
The South American oil giant is the only member of OPEC in the Western Hemisphere and is dependent on the sale of crude oil to the U.S. to support its economy. Experts say restricting the sale of oil to the U.S. would be a blow to the Venezuelan government’s coffers.
The U.S. sent $12 billion to Venezuela for oil purchases last year, according to Bloomberg, which first reported the news about the plan being hatched by the state oil firm Petróleos de Venezuela.
The Energy Department analysis arm suggests that Venezuela may look to rely on sales of crude oil to China if sanctions are imposed. The Energy Information Administration has said in previous reports that over the last few years “an increasing share of Venezuela’s exports has been delivered to China.”
It also has signed deals in the last decade with Iran to conduct oil exploration and development in the region. EIA points out that the country suffers from a significant lack of investment in its oil infrastructure despite being a founding member of OPEC.
“While Venezuela is important to the global oil market, the government’s reinvestment of oil revenues into social programs instead of reinvestment into exploration, production and refining has led to declines in output,” the agency said.
A sharp decline in oil prices due to global oversupply has led the country’s economy into serious decline. Both Venezuela and Iran have blamed U.S. fracking and shale oil development for the downturn that has harmed the nations’ economies.
