By Matt Spetalnick, Alexandra Ulmer and Patricia Zengerle
WASHINGTON (Reuters) – The Trump administration is considering imposing sanctions on a military-run Venezuelan oil services company and restricting insurance coverage for Venezuelan oil shipments to increase pressure on socialist President Nicolas Maduro, a U.S. official said.
With Maduro running for another term in an election that Washington and its allies regard as a sham, the United States is weighing sanctions that would target Venezuela’s vital oil sector beyond what has been done before, the official told Reuters on Wednesday. Some measures could come before the vote and others could be imposed afterwards.
The official, who is close to U.S. internal deliberations on Venezuela policy and who spoke on condition of anonymity, would not rule out an eventual full-scale ban on Venezuelan oil shipments to the United States, among the toughest of oil-related sanctions.
“I think (it would cause) a fairly strong shock to the oil market in the short term,” the official said.
The official stressed that no decisions have been made and that any U.S. action would take into consideration potential harm to ordinary Venezuelans, already suffering from food shortages and hyperinflation, and the country’s neighbors as well as the impact on the U.S. oil industry and consumers.
Venezuela’s Information Ministry did not respond to a request for comment on potential further sanctions.
Maduro, himself subject to sanctions last year, regularly laughs off Washington’s disapproval and blames the U.S. “empire” for his country’s economic woes, saying it is trying to undermine Venezuela’s leftist government.
Venezuela was the fourth largest supplier of crude oil and products to the United States in 2017, according to the U.S. Energy Information Administration. Its crude oil sales to the United States last year were the lowest since 1991, according to Thomson Reuters trade flows data.
“Oil sanctions are not taken lightly,” the official said. “This would be a fairly strong escalation for U.S. policy, whether it’s a complete oil sanction or salami slices of different graduated steps.”
President Donald Trump’s administration is also considering possible sanctions against additional military and political figures, including Socialist Party No. 2 Diosdado Cabello, the official said.
Experts say sanctions on individuals have had little or no impact on the Venezuelan government’s policies.
Washington’s crafting of new sanctions comes as Venezuela’s main opposition coalition is boycotting the election, citing “fraudulent” conditions. Venezuela’s election board postponed the presidential vote from April 22 to the second half of May on Thursday after an agreement between the government and some opposition parties.
Critics had accused Venezuelan authorities of holding the vote early in the year to wrong-foot the opposition. The U.S. official had said before news of the date change that even if Venezuelan authorities delayed the election by a month or two, it was not likely to prompt Washington to hold back on sanctions.
The best tool for making the Venezuelan government feel economic pain, U.S. government sources say, is through “sectoral” sanctions, such as financial measures announced in August that barred U.S. banks from any new debt deals with Venezuelan authorities or state-run oil giant PDVSA.
Venezuela’s foreign minister, Jorge Arreaza, said in Geneva on Tuesday that U.S. sanctions are making foreign debt renegotiation more difficult and causing “panic” at global banks.
Among the possible new U.S. targets is Camimpeg, Venezuela’s military-run oil services firm, the official said. Camimpeg provides PDVSA with assistance in drilling, logistics and security and was founded by the military in 2016 although little is known about its activities.
The opposition says the armed forces are a nest of corruption and accuse Maduro of trying to buy the support of military chiefs by giving them increasing control of the OPEC nation’s crude reserves, the world’s largest.
Another option would be sanctions aimed at putting restrictions on insurance coverage for oil tankers and oil cargos involving PDVSA, the official said.
Oil exports are typically protected by insurance on tankers as well as on the cargo. Without insurance, a vessel cannot navigate in international waters, which means Venezuela’s oil exports would likely be curtailed. Sanctions on cargo insurance would also hurt because PDVSA has a limited tanker fleet.
The Trump administration is still considering blocking the sale of lighter U.S. crude and refined products that Venezuela mixes with its heavy crude and then exports, the official told Reuters.
“There’s a host of additional sanctions that could be imposed. The president has all those before him,” U.S. Senator Marco Rubio said in an interview with Reuters. Rubio has pushed for Trump to take a tougher line on Venezuela than former President Barack Obama.
In a commentary in the Miami Herald, Rubio called for a “united front of disaffected government insiders and military personnel, with popular support from the Venezuelan people, to remove Maduro.”
The U.S. official interviewed by Reuters reiterated the administration’s stance that it is not seeking “regime change.”
The Venezuelan government did not respond to a request for comment on Rubio’s remarks.
Maduro and other senior officials have frequently accused the United States of trying to provoke a coup.
The Trump administration has also pressed Cuba, Venezuela’s Communist-ruled ally, to stop “propping up” Maduro, the U.S. official said.
Cuba has long depended on Caracas for cut-rate oil supplies that have fallen off amid Venezuela’s crisis. Cuba has provided Venezuela with doctors and other services. U.S. authorities have said that includes a political and security advisory role.
Asked whether Washington could impose sanctions on Cuban officials, the U.S. official said, “I’m not prepared to comment on that,” but added that the administration was “looking at all options” necessary to pressure Venezuela.
The Cuban government did not respond to a request for comment.
(Reporting by Matt Spetalnick, Alexandra Ulmer and Patricia Zengerle in Washington; Additional reporting by Marianna Parraga in Houston, Andrew Cawthorne in Caracas and Sarah Marsh in Havana; Editing by Leslie Adler, Jonathan Oatis and Frances Kerry)