Russian oil firm sanctioned over Venezuela
WASHINGTON — The United States on Tuesday imposed tough economic sanctions against a Russian oil giant that is keeping Venezuela’s ruling government afloat, in a gamble that could roil global oil prices.
The broad sanctions were levied against Rosneft Trading, a subsidiary of the Russian state-controlled Rosneft Oil Co., and Didier Casimiro, the subsidiary’s president and board chairman. Casimiro is also identified on the Rosneft website as the parent company’s vice president for refining.
The potential financial hit on global markets represents what the Trump administration has concluded is the cost of pressuring President Nicolás Maduro of Venezuela to leave power, nearly two years after he was reelected in a widely disputed vote.
Tuesday’s move follows a highly public effort by Juan Guaidó, the Venezuelan opposition leader, to pressure allies to take a more aggressive stance against Maduro. Guaidó called the sanctions “a victory” on Twitter, adding, “Those who support the dictator, whoever they are, wherever they come from, should assume the consequences.”
Venezuela is exporting about 70 percent of its oil through Rosneft in what Treasury Secretary Steven Mnuchin described as the “looting of Venezuela’s oil assets by the corrupt Maduro regime.”
“This is a campaign of pressure,” said Elliott Abrams, the State Department’s special envoy for Venezuela policy. “And the pressure continues to mount.”
“I would not say that any individual step can be calculated to bring an end to the crisis,” Abrams said. “But I think this is a very significant step, and I think you will see companies all over the world in the oil sector now move away from dealing with Rosneft Trading.”
Oil markets seemed to shrug off the sanctions, dipping about a half-percent in trading Tuesday with prices at around $51.80 per barrel. It can take weeks, however, for effects to be fully seen.
“We regard today’s action as somewhat limited in nature,” Clearview Energy Partners, a consultancy, said in a research note Tuesday.
Administration officials insisted that the global oil market was stable enough to withstand the new penalties against Rosneft or any entity that does business with it. Officials also said Rosneft’s customers would be given 90 days to unwind themselves from the Russian shipping company — a sign of how difficult it may be for global customers to quickly cut their ties.
Maduro has led Venezuela’s economy into shambles and prompted an exodus of millions of people into neighboring South American states. The sanctions are among the biggest hits to Venezuela’s economy since the United States banned Venezuela’s state oil company last January, said Francisco Monaldi, a Venezuela energy expert at Rice University in Houston.
“Rosneft will now have to think how much Venezuela is worth from a business standpoint, compared to the costs of remaining under sanctions,” Monaldi said.
But, he added, the sanctions could misfire if Rosneft concludes that the higher costs of doing business in Venezuela are justified by the geopolitical benefit of helping out Russia’s key ally in South America.
Rosneft sells about two-thirds of Venezuela’s oil, largely to Asia, and often by obscuring the cargo’s source and destination. Officials said Maduro was taking the profits from the oil sales facilitated by Rosneft to hang onto power, in part by bolstering the Venezuelan military and its harsh crackdown against the public.
Rosneft’s trading subsidiary was created in 2011 to help its Moscowbased parent company carry out foreign projects, including shipping crude oil. In the past few years, faced with U.S. and European sanctions, Rosneft has pushed deeply into places like Cuba, China, Egypt and Vietnam.
Its two largest customers are China and India, both of which have struggled to procure sufficient oil supplies after the Trump administration imposed sanctions against Iran. In the case of India, where Trump is scheduled to visit next week, the government in Delhi has been forced to find new suppliers — including from the United States.
Abrams noted that global oil prices are down compared with when the Trump administration first began its sanctions campaign against Maduro’s government.
“We’re not trying to raise oil prices — we’re trying to diminish the amount of money available to the Maduro regime,” Abrams told reporters at the State Department.
Trump administration officials outlined a series of transactions and planned shipments over the past year — including millions of barrels of crude oil — as evidence of Rosneft’s support to Maduro.