The Trump administration will sanction Venezuela’s state-owned oil firm, a move the White House has long put off for fear that it would raise oil prices and hurt American refiners.
The move comes after a turbulent week for Venezuela that has created a standoff over the country’s leadership. The sanctions aim to transfer control of Venezuela’s oil wealth to forces that oppose socialist dictator Nicolas Maduro and deprive the strongman of resources that could prolong his grip on power.
Last week, the opposition leader of Venezuela’s National Assembly, Juan Guaido, named himself interim president amid street protests. President Donald Trump soon recognized Guaido as the nation’s leader and his administration has been marshaling international support for the opposition figure since then.
Maduro, having recently started another term following highly disputed elections, is refusing to back down. He is supported by the country’s minister of defense and Russia.
Mnuchin said PDVSA has long been a vehicle for embezzlement and corruption by officials and businessmen. The sanctions against PDVSA will prevent the nation’s oil wealth from being diverted to Maduro and will only be lifted when his regime hands control of them to successor government, he added.
“The path to sanctions relief for PDVSA is through the expeditious transfer of control to the interim president or a subsequent democratically elected government who is committed to taking concrete and meaningful actions to combat corruption,” Mnuchin said during a White House press briefing.
Under the sanctions, U.S. companies can continue to purchase Venezuelan oil, but the payments must be held in an account that cannot be accessed by the Maduro regime.
“If the people in Venezuela want to continue to sell us oil, as long as the money that money goes into blocked accounts, we’ll continue to take it,” Mnuchin said. “Otherwise we will not be buying it.”
Oil prices pared some losses after news of the sanctions broke, but major benchmarks were still down more than 2.5 percent following the official announcement. U.S. crude ended Monday’s session 3.2 percent lower earlier in the day.