The power of the environment: Trump is increasing economic pressure on Caracas

Venezuelan oil revenues were under threat after Donald Trump announced a blockade against tankers in the Latin American country. There are currently about 18 of them near the shores of the Bolivarian Republic. This decision was made just a week after the seizure of a ship that transported oil from Venezuela to Cuba, as well as in continuation of Washington's consistent policy of pressure on the head of the republic, Nicolas Maduro, and his administration. How many hydrocarbons Venezuela produces and where it will redirect the barrels that cannot be supplied by the counterparty by sea is in the Izvestia article.

Venezuela's oil sector is under threat

The escalation of the conflict between the United States and Venezuela has reached a new stage. The American president ordered the imposition of a blockade regime on all oil tankers that are under sanctions and are heading to the Bolivarian Republic or departing from its shores. Donald Trump announced this decision in his traditional manner on the Truth Social page.

"Venezuela is surrounded by the largest armada that has ever assembled in the history of South America. This armada will only grow, and the shock they will experience will be like they have never seen before. This will continue until they return to the United States all the oil, land and other assets that they previously stole from us," the American president wrote.

There are about 18 tankers fully loaded with oil in Venezuelan waters right now. At the same time, eight of them have the status of "very large container ships". According to some experts, taking into account those tankers that are not under US sanctions, a total of up to 11 million barrels of oil are stationed off the coast of the Bolivarian Republic, awaiting shipment to other countries.

The American president made this decision a week after the United States seized the tanker Skipper, which was supposed to transport oil from Venezuela to Cuba. Washington claims that the ship has been under American sanctions for several years, as it allegedly participates in an oil transportation scheme to finance the Iranian Revolutionary Guard, as well as Hezbollah. At the same time, the Guyanese authorities claim that the Skipper is flying their flag illegally.

The value of the Skipper cargo, according to some estimates, is about $95 million, and it contains about 1.9 million barrels of Venezuelan oil. At least two American oil companies are claiming the contents of the tanker as compensation for the forced sale of their subsidiaries to the Venezuelan state oil and gas company PDVSA. There are also threats from the United States to seize other Venezuelan tankers.

In Caracas, the US statements were called a violation of international law, freedom of trade and navigation.

"In full compliance with international law, which protects us, our constitution and the laws of the republic, Venezuela reaffirms its sovereignty over all its natural resources, as well as its right to freedom of navigation and trade in the Caribbean Sea and the oceans," the Venezuelan authorities said in an official statement.

President Nicolas Maduro, in turn, called for worldwide protests "against piracy by the US government" involving workers in the oil, gas and marine industries.

The pressure on the oil sector, whose revenues are important for the Latin American country's economy, is a continuation of the conflict between the United States and Venezuela. Earlier, the United States carried out several attacks on ships allegedly linked to drug trafficking from Venezuela. In addition, the White House admits the possibility of launching a ground operation. Given that Venezuela is far from the main exporter of narcotic substances to the United States, everything that is happening is most likely part of the policy of the Donald Trump administration to change power in Caracas. This is confirmed by leaks from foreign media: the issue of Nicolas Maduro's resignation, according to their information, was raised during a telephone conversation between the Venezuelan leader and Donald Trump.

Dependence of the Venezuelan economy on oil revenues

Venezuela has the largest proven oil reserves on the planet, estimated at about 303 billion barrels, accounting for about 17% of the world's resources. Despite the existing restrictions and sanctions, oil brings most of the income to the country's budget. The money from its sale accounts for approximately 88% of the $24 billion that Venezuela earns from exporting its products.

— Venezuela produces just over 1 million barrels per day, and exports at least 600 thousand of them, that is, more than half. Accordingly, the domestic market is currently unable to absorb such a volume of oil. Theoretically, some of it can be delivered by land transport, but the volumes that, even with the most favorable development of events, could be redirected overland cannot be compared with those sent by sea," explained Alexander Frolov, Deputy Director General of the Institute of National Energy.

The collapse of the Venezuelan economy will not happen, the expert continues, but the situation for the country, which is already in a state of economic crisis, will become much more difficult.

The Venezuelan economic crisis is largely related to its dependence on oil revenues. Back in 2012, Caracas received $120 billion annually, now it is about $21 billion, foreign analysts say. According to experts, the country has significantly reduced the amount of oil produced due to poor governance, corruption and American sanctions. The cost of Venezuelan fuel has also dropped significantly in recent years.

Historically, the United States has been the main buyer of oil from Venezuela. After the nationalization of natural resources in the 1970s, the American companies Exxon, Mobil, Shell and Gulf Oil lost about $5 billion in assets, but they were compensated for only $1 billion (this is probably what Trump is talking about in his publication). In the 1990s, some American companies returned to the Venezuelan oil market, but later were forced to give up the exclusive right to production revenues and enter into cooperation agreements with the state-owned PDVSA.

Chevron became the company that was best able to adapt to both the restrictions imposed by the United States and the requirements of the Venezuelan authorities. Now it is almost the only business that has been granted a license by the United States to operate in Venezuela. Chevron accounts for almost a quarter of the oil produced in the Latin American country. And even during the active US campaign in the Caribbean, Chevron ships were given the opportunity to move along the route to Venezuela.

China remains the other major buyer of Venezuelan oil. Approximately 80% of exports go to this country. Cuba is largely dependent on Venezuelan oil, which suffers from fuel shortages and periodic power outages due to the US economic blockade. Caracas sells oil to her on preferential terms. In some cases, the payment is replaced by services. For example, according to media reports, Cuban doctors are being sent to Venezuela.