What the Venezuela Sanctions May Mean for Future Sanctions Programs

When the Trump Administration designated Venezuelan state-owned oil producer Petreoleos de Venezuela (“PdVSA”) on January 28, 2019, pursuant to preexisting sanctions relating to the political situation created by the Maduro regime, it sent a significant but not unanticipated ripple through the global petroleum markets.  The impact of the sanctions for commodities traders and petroleum refiners—particularly in the U.S. Gulf Coast, where PdVSA’s steady supply of heavy crude has long been a sizable staple feedstock—was fairly immediate, and appears to have had the intended effect of isolating PdVSA, impairing its production capabilities and reducing its cash revenues.  According to industry reports, many of the larger commodity traders around the world have largely if not entirely backed away from trading in PdVSA crude, and PdVSA has been cut off from its primary sources of naphtha and other diluents it needs to move its heavy crude through…

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