Washington, DC — The United States’ seizure of a Venezuelan oil tanker earlier this week, followed by sanctions on six additional vessels and reports that further seizures are planned, marks a sharp escalation in US enforcement of its unilateral sanctions on Venezuela. Oil exports make up nearly 90 percent of Venezuela’s export revenue, and experts warn that disrupting this trade will exacerbate the already dire economic situation in Venezuela, with the greatest impact falling on the general population.

CEPR is reviewing details of recent reporting on the role and impact of US intervention there in recent years, including economic sanctions, on our Live Tracker.

“This is vital information that often goes unnoticed about Venezuela’s economic collapse, and the impact of broad economic sanctions on the general population. There have been seven episodes of hyperinflation in Latin America since World War II, with a median duration of four months,” said Center for Economic and Policy Research (CEPR) Co-Director Mark Weisbrot. “Venezuela’s has lasted more than four years, and this was a direct result of US sanctions.

“This was the main cause of the worst depression in the history of this hemisphere — more than three times as bad as the Great Depression of the United States in the 1930s, as measured by the loss of GDP. Tens of thousands of Venezuelans died in just the first year of the Trump sanctions, and many more in the years that followed. This economic collapse is mainly because the sanctions cut off access to the international financial system and blocked vital foreign exchange earnings from oil exports; and so Venezuela is threatened with another devastating return to hyperinflation.

“This could be the purpose of seizing oil tankers.”

International Condemnation Against US Theft of Venezuelan Oil Tanker Grows

The Wall Street Journal reports that the oil seized so far is valued at roughly $80 million, equal to about 5 percent of Venezuela’s monthly import needs. “If you cause a massive decline in oil revenues, that’s going to cause another massive recession,” said CEPR Senior Research Fellow Francisco Rodríguez.

The Journal also reports that the threat of further seizures has already disrupted tanker traffic. As of Thursday, about a dozen ships were reportedly idling off Venezuela’s main oil port, with none entering to load crude — a sharp contrast with normal operations, when multiple tankers would be docking or conducting ship-to-ship transfers.

Bloomberg similarly notes that the seizure could cut off one of Venezuela’s last functioning revenue channels at a moment when the country is again vulnerable to economic collapse. After sweeping US sanctions in 2019 severed Venezuela’s access to foreign currency, the government spent years stabilizing prices, ending hyperinflation, and recovering from one of the “deepest recessions in modern history.” Continued seizures could accelerate rising prices and jump-start another deadly period of hyperinflation.

And while these measures are likely to inflict severe suffering to the Venezuelan people, they are unlikely to dislodge Maduro, who has survived far worse economic shocks, including the 2020 COVID-19 pandemic when oil production fell to less than half of today’s levels and prices were much lower.

“We could see a complete collapse in Venezuelan oil exports if the US continues seizing tankers, because it would be equivalent to imposing a de facto naval blockade of Venezuela,” said Rodríguez.

(CEPR)

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