The Treasury Department of the United States placed sanctions on Venezuela’s state-owned oil company Petroleos de Venezuela, S.A (PDVSA) on January 28 in an effort to stabilize democratic order to the region and combat corruption in Venezuela.
These sanctions are designed to help prevent any further diversion of Venezuela’s assets and preserve them for the Venezuelan people. The sanctions block payments made directly to PDVSA accounts and instead direct them into escrow accounts that PDVSA will not get access to until the company is controlled by a new government. Secretary of the Treasury Steven Mnuchin said, “The path to sanctions relief for PDVSA is through the expeditious transfer of control to the Interim President or a subsequent, democratically elected government.” What he is referring to is the political stalemate between Interim President Juan Guaido and Incumbent Nicholas Maduro, a result that has been contested since the election in May of 2018.
Venezuela primarily exports crude oil to India, China and the United States, with the latter receiving 500,000 bpd. Currently, there are tankers carrying as much as 7 million barrels of Venezuelan crude sitting in the Gulf of Mexico since they were purchased prior to the sanctions. PDVSA has already said they plan to redirect the tankers to be sold in Europe and Asia.