Venezuelans yesterday braced for the deepening of a brutal economic crisis after the US imposed sanctions sharply curbing the nation’s vital oil exports, while the socialist government responded by refusing to load crude oil cargoes without payment.
The administration of US President Donald Trump hopes the sanctions, which bar state-owned oil company Petroleos de Venezuela SA (PDVSA) from collecting proceeds from crude oil sales to US refineries, pressure Venezuelan President Nicolas Maduro to step down and allow opposition leader and self-proclaimed president Juan Guaido to call elections.
In a defiant national broadcast on Monday, Maduro said he would take legal action to challenge the sanctions and defend Citgo Petroleum Corp, PDVSA’s US refining subsidiary.
He also pledged to retaliate, but did not announce any specific measures.
“We will provide the reciprocal and convincing response needed to defend Venezuela’s interests in due time,” Maduro said.
PDVSA responded to the sanctions by ordering customers with tankers waiting to load crude oil destined for the US to prepay, three sources with knowledge of the decision said.
Such prepayment could be a breach of the sanctions.
The loss of revenue from the US, the No. 1 buyer of Venezuelan crude oil, was sure to further hamper the government’s ability to import basic goods such as food and medicine, exacerbating a humanitarian crisis that has prompted more than 3 million people to flee the hyperinflation-stricken nation in recent years.
“If you do not find a place for that crude quickly, the room for maneuver will shrink and imports will be affected,” said Asdrubal Oliveros, director of Caracas-based consultancy Ecoanalitica.
Guaido, who argues that Maduro usurped the presidency on taking office for a second six-year term on Jan. 10, following an election in May last year considered fraudulent by the opposition, has said he is prepared to receive US$20 million in humanitarian aid pledged by the US.
He also moved to set up new boards of directors for Citgo and PDVSA, which could allow his parallel government to collect money held in escrow accounts in the US.
The sanctions threatened to hasten PDVSA’s unraveling.
“There is total shock. This company is already too beat-down,” a high-level PDVSA manager said on Monday on condition of anonymity.
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