US holds off on new Venezuela oil sanctions

The US does not plan to respond to the Venezuelan government's crackdown on the political opposition by imposing tougher sanctions against Caracas' oil sector, a decision that will allow Chevron to maintain its foothold in the country.

Venezuelan president Nicolas Maduro's government has forced his election rival Edmundo Gonzalez to flee the country after issuing an arrest warrant against him earlier this month. The Venezuelan opposition has produced electoral records to show that Gonzalez likely won the 28 July presidential election, a claim backed by Washington.

The US administration today announced sanctions against 16 top Venezuelan officials, including members of the Venezuelan election authority and judges who issued warrants for arrests of opposition leaders. "Rather than respecting the will of the Venezuelan people as expressed at the ballot box, Maduro and his representatives have falsely claimed victory while repressing and intimidating the democratic opposition in an illegitimate attempt to cling to power by force," US secretary of state Tony Blinken said.

Notably absent from today's action is the one measure that US lawmakers from both parties urged the administration to undertake — rescinding permission for Chevron to continue shipping crude to the US produced in its joint venture with PdV. Chevron's Venezuela production averaged 200,000 b/d in July.

"We are also very focused on the enforcement of existing sanctions, as well as evaluating how best to calibrate our sanctions policy towards Venezuela in light of overall US interests," a senior US official told reporters today.

Much of the Venezuelan oil sector is already subject to US sanctions, forcing PdV to rely on shadow fleet tankers and intermediaries to channel exports to buyers in China's Shandong region. Chevron and some other international companies have exemptions from sanctions allowing them to load Venezuelan crude, but those exports typically are made under crude-for-debt arrangements.

No matter how limited, Chevron's presence in Venezuela has provided a talking point for congressional Republicans, who contend that President Joe Biden's administration is suppressing the US oil industry while relying on imports from Venezuela and other dictatorial regimes. US crude imports from Venezuela averaged 194,000 b/d in January-June, according to the Energy Information Administration.

Senior Democratic lawmakers separately called for the US to step up its oil sanctions. "The Maduro regime clings to power using oil revenues dependent on US involvement," Senate majority whip Dick Durbin (Illinois) said on 9 September. Durbin has introduced a bill to compel the White House to end all oil-related investment and trade with Venezuela.

The senior US official defended the use of individual sanctions as an appropriate response to the Maduro crackdown. "When they see their name as an individual on the [US] sanctions list, today is not a good day," the official said. "We believe that this should prompt deeper reflection of officials aligned with Maduro about how far they want to go down this path of facilitating a blatant effort to cling to power."

Efforts by the US and Venezuelan opposition leaders to persuade Maduro's senior aides to abandon his cause have not paid off to date, despite the promise of sanctions relief or immunity from prosecution.

But US officials appear to believe they still have time to figure out the best combination of diplomacy and sanctions to enable a power transition in Venezuela before Maduro's current term expires in January.

By Haik Gugarats