Can Venezuela survive US targeting its oil tankers?
Venezuela has been evading the US oil export embargo for years, selling crude oil mostly to China at discounted prices. But even this limited revenue stream is now under threat after the US seized a tanker bound for Cuba.
Venezuela lost 1.9 million barrels of oil in one fell swoop, according to sanctioned President Nicolas Maduro, who condemned an act of “sea piracy.” According to ship tracking platform MarineTraffic, this figure was close to 1.1 million barrels.
The estimated value of the oil seized, which the United States says it plans to keep, ranges from $50 million to $100 million.
Despite a strong US naval presence in the Caribbean Sea since September, Venezuela’s so-called “ghost” tankers have so far remained untouched.
In a follow-up move on Thursday, the U.S. Treasury announced sanctions on six companies it said transported the South American country’s oil, describing the six ships as “blocked property.”
Francisco Monaldi of the Baker Institute, a Houston-based think tank, told AFP that such actions would “cause the black market fleet to be afraid to come to Venezuela, which will increase the risk premium and therefore the discounts (to buyers).”
Maduro has claimed that the massive US military deployment within striking distance of his country is part of a plan to oust him and “steal” Venezuela’s abundant oil under the guise of an anti-drug operation.
Targeting ships carrying Venezuela’s only valuable product could indeed jeopardize Maduro’s political fate.
“If there is no oil export, this will affect the foreign exchange market and the country’s imports… There may be an economic crisis,” Elias Ferrer of Venezuelan consultancy firm Orinoco Research told AFP.
“Not only is there a recession, but there is also a shortage of food and medicine because we cannot import.”
– Black market –
Venezuela is estimated to have approximately 303 billion barrels of oil reserves, more than any other country, according to the Organization of the Petroleum Exporting Countries (OPEC).
But years of mismanagement and corruption reduced production from a peak of more than three million barrels per day (bpd) in the early 2000s to a historic low of 350,000 bpd by 2020.
On track to reach one million barrels a day this year, analysts say it will be difficult to raise production beyond that given the shortage of foreign currency needed to improve infrastructure.
Caracas has been struggling under the US oil embargo and economic sanctions regime, which has been in place since 2019 and will be tightened in 2025.
