Trump could hit Venezuela where This particular hurts: Oil

Why Venezuela is usually in crisis

President Trump features a powerful weapon if he decides to punish Venezuela: sanctions on oil, the only source of cash for the crisis-torn nation.

Venezuelan President Nicolas Maduro has called for a vote on Sunday which Trump in addition to many some other critics say will transform the South American government into dictatorship.

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Maduro “dreams of becoming a dictator,” Trump said in a statement on July 17. “The United States will not stand by as Venezuela crumbles.”

For his part, Maduro called Trump an “emperor.”

The Trump administration on Wednesday slapped sanctions on 13 government in addition to military officials tied to Maduro. Mexico in addition to Colombia followed with sanctions on the same individuals.

Trump also threatened further “strong in addition to swift economic action” if Maduro goes through with the vote. Senior administration officials say “all options are on the table,” which means Trump could ban shipments of Venezuelan oil to the U.S. Or U.S. oil going to Venezuela. Or both.

Related: Venezuela’s hyperinflation is usually jaw-dropping See for yourself

which possibility isn’t lost on Venezuela’s young protesters in Caracas known as “La Resistencia” who go up against Maduro’s national guard in violent clashes nearly every day.

One protester, an engineer who declined to give his name, told CNN Wednesday “in a way, This particular could help us,” arguing which U.S. sanctions could force Maduro to change his ways or step down.

however sanctions on oil are a double-edged sword: This particular’s one of Trump’s few options to genuinely hurt Maduro. Venezuela’s only source of income is usually oil sold abroad in addition to one of its top customers is usually the United States. In April, the U.S. accounted for about 10% of Venezuela’s oil exports.

“If they ever got sanctions coming from the U.S. — which could be completely crippling,” says Diego Ferro, co-investment officer at Greylock Capital, a U.S. firm which owns Venezuelan debt.

Choking off the country’s lone source of income, however, risks worsening Venezuela’s humanitarian crisis. Millions of people continue to suffer through extreme shortages of food in addition to medicine there.

Another risk: U.S. gas prices could rise. Venezuela sends cheap oil to U.S. energy firms, in addition to oil sanctions could force the U.S. to buy oil elsewhere. which pivot could cause American gas prices to pop.

Related: Delta ends flights to Venezuela

“Nobody wants to be the guy which raises gas prices, which’s not not bad for elected people,” says Russ Dallen, managing partner of Caracas Capital, a U.S. investing firm which doesn’t own Venezuelan debt.

U.S. sanctions could also embolden Maduro’s base, igniting them to double down on their heavy-handed tactics against Venezuela’s opposition protesters.

Venezuela exported the third most oil to the U.S. so far This particular year, behind Saudi Arabia in addition to Canada, according to data coming from the U.S. Energy Information Administration. Its oil exports to the U.S. totaled $10.2 billion within the year ending in May, according to Panjiva, a global trade research firm.

Given all the risks, some doubt Trump could actually go forward that has a broad sanction on Venezuelan oil.

“Once you deploy a sanction, there can be unintended consequences,” says Eric Farnsworth, vice president at the Council of the Americas, a business association. “I’m not convinced they’re going to move forward to sanction the energy sector.”

Trump administration officials say any further sanctions announcements could come soon after Sunday’s vote.

CNNMoney (Caracas ) First published July 29, 2017: 12:51 PM ET

Source : Trump could hit Venezuela where This particular hurts: Oil

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