Trouble for Venezuela crude?


New sanctions could be on the way for Venezuela’s oil industry as the country’s controversial president, Nicolas Maduro, retaliated against opposition leaders after prevailing in a disputed July referendum, according to MarketWatch.

The referendum paved the way to a rewrite of the nation’s constitution and tighten Maduro’s grip on power, action that had sparked deadly protests.

Venezuelan oil production outages would likely send ripple effects through the oil market, a bullish factor, at least short term, across the crude market, analysts said. On July 31, Treasury Secretary Steven Mnuchin announced the Trump administration had sanctioned Maduro, freezing any of his personal assets held within the U.S.

Maduro seemed unfazed by the sanctions; on August 1 Venezuelan authorities dragged two opposition leaders from their homes after Maduro vowed to jail opposition politicians who had accused him of electoral fraud.

Mnuchin didn’t rule out broader sanctions, which could include banning U.S. imports of Venezuelan crude or restricting exports of U.S. oil to Venezuela. Of the two, the former could give administration officials some pause given the uncertainty surrounding its impact on U.S. gasoline prices and other factors, analysts said.

Venezuela is the third largest supplier of oil imports to the U.S., accounting for 10% of U.S. oil imports. (Source: MarketWatch))

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