The United States is considering putting more pressure on Nicolas Maduro’s regime in Venezuela, U.S. Secretary of State Mike Pompeo recently said, and some analysts speculate that the increased pressure may include a ban on U.S. exports of light oil which Venezuela uses to dilute its extra heavy oil to move it to pipelines for exports.
“I think you’ll see in the coming days a series of actions that continue to increase the pressure level against the Venezuelan leadership – folks who are working directly against the best interests of the Venezuelan people, ” Secretary Pompeo said in an interview with Fox News on Friday.
Pompeo didn’t specify whether that increased pressure would be sanctions and if so—sanctions on what or whom.
According to analysts who spoke to S&P Global Platts on Sunday, while a ban on U.S. imports of Venezuelan crude oil is off the table, because the effect that such a move will have on U.S. Gulf Coast refiners, oil prices, and gasoline prices, the U.S. Administration may be considering restrictions on U.S. exports of light oil to Venezuela.
According to Francisco Monaldi, the Latin American energy policy fellow at Rice University’s Baker Institute for Public Policy, the United States may be mulling sanctions on individuals or possibly banning U.S. exports of light oil and refined oil products.
Such bans have always been on the table, Monaldi told Platts.
According to Joe McMonigle, an analyst with Hedgeye Risk Management, the United States is not studying sanctions on Venezuela’s oil because such a move could further drive oil prices up, which the White House surely doesn’t want ahead of the mid-term elections. But, McMonigle says, U.S. exports of light oil for diluents could be restricted.
According to the latest available EIA data, U.S. exports of petroleum products to Venezuela averaged 134,000 bpd in June 2018, up from 114,000 bpd in May, and from 90,000 bpd in June 2017.
Meanwhile, Venezuela’s crude oil production has been constantly dropping over the past two years due to a lack of investment, mismanagement, and a severe economic crisis. As per OPEC’s secondary sources, Venezuela’s oil production fell by 36,000 bpd from July to average 1.235 million bpd in August—compared to an average 1.911 million bpd for 2017.