Despite tough US sanctions since Donald Trump’s first presidency, Caracas has managed to sell its oil, fueling its battered economy. But Trump’s tactics, reminiscent of naval blockades of yesteryear, are further straining the government of Nicolas Maduro.
Washington is now targeting oil tankers operating under US sanctions and heading to or from Venezuela, announcing a “total and complete blockade” of such vessels.
Ships under US sanctions can face severe restrictions, such as being denied access to certain ports and denied services such as refueling and repairs. This designation also puts the ships at high risk of seizure and can threaten the assets of their owners and customers.
Complete blockades are illegal under international law. However, in the case of Venezuela, the “blockade” only applies to ships that are under sanctions, meaning it is not a complete blockade.
30 tankers
The US Treasury Department’s Office of Foreign Assets Control (OFAC) lists more than 50 ships worldwide under sanctions related to Venezuela.
According to an analysis by independent ship-tracking website TankerTrackers.com and global intelligence firm Kpler, more than 30 tankers that have been “stamped” by the US Treasury Department and operate in the Caribbean could be directly affected by the blockade.
Of these, at least 12—including the Skipper, which was seized by U.S. forces last week—are carrying Venezuelan oil.
The measure announced by Trump applies to tankers sanctioned for their ties to Venezuela, but could also include ships designated for ties to other countries and entities. The tanker seized last week had ties to a sanctioned Russian oil magnate and had been designated for smuggling Iranian oil, according to a Treasury Department statement.
The implications for Venezuela
Maduro has been using sanctioned ships to export oil to countries like China, which has been known to clash with U.S. financial institutions.
In other cases, it has used so-called “shadow fleet” ships—also often under sanctions—to funnel Venezuelan oil to global markets, hiding its origin.
Venezuela is estimated to have about 303 billion barrels of oil reserves, according to the Organization of the Petroleum Exporting Countries (OPEC) — more than any other country.
If there are no oil exports, that will affect the foreign exchange market, the country’s imports… It could cause an economic crisis. Not just a recession, but also shortages of food and medicine because we won’t be able to import.
Two U.S. officials said the new policy, if fully implemented, could have a significant impact on Maduro.
If Venezuela’s affected exports are not replaced by increased OPEC spare capacity, the impact on oil prices could range from $5 to $8 per barrel.
I would expect inflation to skyrocket and there would be massive and immediate migration from Venezuela to neighboring countries.
If the Trump administration can effectively block all sanctioned ships from transporting Venezuelan oil, this could have a “huge impact” on Venezuela’s government revenues.
About 80% of Venezuela’s oil is sold on the black market, and oil accounts for more than half of the country’s fiscal revenue.
Is the global market at risk?
However, the blockade is not expected to have a significant impact on the global oil market.
Although Venezuela has the largest proven oil reserves in the world, Venezuelan oil accounts for only a small fraction of global consumption. Venezuela exports less than 1 million barrels of oil per day, about half of what Iran exports.
Previous blockades
This is not the first time the US has used this means of imposing itself.
Recall the example of the US-led naval blockade of Cuba during the Cuban Missile Crisis in 1962, which brought the world to the brink of nuclear war due to the deployment of Soviet nuclear missiles in Cuba.
At that time, President John F. Kennedy imposed a blockade of Cuban waters to prevent the completion of missile bases. However, the US used the term “quarantine” instead of “blockade” in order not to be considered an act of declaration of war and thus avoid a generalized conflict with the USSR. In contrast, Trump today explicitly declared a “complete blockade” in his announcement.
There was also the blockade of Iraq in 1990 during the Gulf War. At that time, the US, together with a multinational force, conducted the “Maritime Interdiction Operation” (MIO) to prevent supplies from entering Iraq. The US Navy inspected tens of thousands of merchant ships and derailed the routes of thousands more.
US presidents have broad discretion to deploy the country’s armed forces abroad, but the blockade invoked by Trump is a new test of presidential powers.
