Dayton Daily News
Citizens may suffer first from U.S. sanctions on Venezuela oil
CARACAS, VENEZUELA — When President Donald Trump slapped surprise oil sanctions on Venezuela aimed at toppling President Nicolás Maduro, exports plunged and banking froze as the effects hit harder and faster than expected.
How ordinary Venezuelans will endure the magnitude of the U.S. sanctions is still unknown. But in recent days it has become clear that Venezuela’s state oil company, the main target of the sanctions as Maduro’s bankroller, has found a few ways to survive, with some Russian help.
If Maduro hangs on, many in Venezuela fear that the sanctions imposed last week will push the already suffering nation of about 30 million people into an even greater humanitarian catastrophe.
“I’m not sure the U.S. has a Plan B if this doesn’t work in getting rid of Maduro,” said Francisco Rodríguez, a Venezuelan economist at Torino Capital, a brokerage firm. “I’m afraid that if these sanctions are implemented in their current form, we’re looking at starvation.”
Venezuelan oil exports to the United States, which provide the biggest source of cash for Maduro’s government, plummeted 40 percent last week. Customers suspended contracts, banks suspended Venezuelan accounts, and a dozen tankers filled with Venezuelan crude sat stranded across the Caribbean.
“We can’t charge, we can’t receive money. Our finances are paralyzed,” said Reinaldo Quintero, head of the Venezuelan Oil Chamber, an industry group that represents the country’s 500 biggest oil service companies. “There will be major collateral damage.”
Rodríguez forecast that sanctions would cut Venezuela’s exports by two-thirds, to just $14 billion this year, and lead to a 26 percent reduction in the economy’s size. The economy has already shrunk by about half since Maduro came to power in 2013, causing millions of people to flee the country or skip meals to survive.
Trump said the oil sanctions were meant to punish Maduro for human rights violations and force him to cede power to Juan Guaidó, the opposition leader whom the United States has recognized as the rightful Venezuelan president.
The sanctions announced by the Treasury Department on Jan. 28 banned U.S. companies and individuals from dealing with Venezuela’s state-run oil company, Petróleos de Venezuela, or PDVSA, which provides about 90 percent of the country’s hard currency. The sanctions essentially shut Venezuelan oil out of the U.S. market.
Maduro, accusing the U.S. of sponsoring a coup attempt, has vowed to remain in power. PDVSA, meanwhile, has partly recovered from the initial paralysis of the sanctions, designing workarounds to stay in business — for now.
Before the sanctions, Venezuela imported about 120,000 barrels of refined oil products a day from the United States. The Venezuelans used the products to make gasoline, and blended lighter American oil with their own thick crude oil so it could flow through pipelines to ports. The U.S. shipments halted last week.
But crucial help came from Venezuela’s biggest oil investor, Russia’s staterun Rosneft. The company said Tuesday that it would increase output in Venezuela this year despite the sanctions, and that it remained committed to the country.
Rosneft’s trading arm also agreed to continue providing PDVSA with vital oil products in exchange for Venezuelan crude, partly replacing the lost American supplies, according to two oil traders and two partners of a Venezuelan firm familiar with the matter. They discussed internal company matters on condition of anonymity.
A Rosneft spokesman said the company pursues only business interests in Venezuela and declined to comment on any barter deals with PDVSA.
Such deals allow PDVSA to continue functioning — albeit a day at a time — without access to the international banking system. PDVSA officials told partners this week the country had secured gas supplies until late March, avoiding an imminent energy crisis.