US hits Venezuela with oil sanctions as Maduro decries 'coup'

Venezuela's embattled President Nicolás Maduro has vowed to take retaliatory action after the US imposed new sanctions on state-owned oil company PDVSA.

In a televised address on Monday night, Maduro (pictured) described the move – which freezes PDVSA's US-based operations – as unlawful and "desperate".

"Never before was there an open coup attempt led from Washington," he said. "Today [US national security advisor] John Bolton asked for a coup, a desperate blow. John Bolton is offending Venezuelan soldiers. He offends international rights.

"With this measure, they want to rob our [US-based subsidiary] Citgo. We will take legal, commercial and logistical measures in the coming hours."

Earlier, Bolton told reporters during a White House briefing that the sanctions meant Maduro's regime could "no longer loot the assets of the Venezuelan people".

Treasury secretary Steven Mnuchin said proceeds from Venezuelan oil exports would now be withheld from the Maduro administration. He added that the order could be revoked if PDVSA recognized opposition leader Juan Guaidó as interim president.

Guaidó swore himself in as the country's acting leader last week on the basis that Maduro's second-term election victory last May was fraudulent. His declaration was immediately backed by Washington and several Latin American countries, including Brazil, Colombia and Argentina, as well as Canada.

Monday's action, which stopped short of an outright ban on Venezuelan oil imports, blocks all PDVSA property and interests within US jurisdiction and bans US citizens from any transactions involving the assets.

Citgo can continue operating only if its revenues are deposited in a blocked US account, Mnuchin said.

The move is expected to worsen Venezuela's already severe economic crisis. The South American country is grappling with hyperinflation, acute shortages of food and medicine and a massive exodus of its citizens to neighboring countries.

Maduro will now be barred from accessing PDVSA assets worth US$7bn while the cost to Venezuela of lost export proceeds will reach US$11bn over the next year, according to the White House.

"Venezuela has not prepared for oil sanctions," consultancy firm Oxford Economics said in a research note. "On the contrary, the country is now more dependent on the US than a year and a half ago, when the threat of oil-sector sanctions became apparent.

"Without adequate compensatory measures like an oil for food programme and extensive humanitarian aid, an asset freeze would imply a loss of 50% of Venezuela's export revenues and an even sharper contraction of imports."

Oil production, which accounts for around 95% of the country's export earnings, has plummeted by more than 1Mb/d since 2016 and the rate of decline is expected to accelerate this year, according to Oxford.

Venezuela is among the top four oil suppliers to the US – sending 41% of its crude exports there – raising questions about how the sanctions will impact the US market. However Bolton said that US oil inventories were large enough to avoid a spike in gasoline prices in the short term.

He added that Venezuela's military could still abandon Maduro, despite having publicly backed him last week.

"Our assessment based on numerous contacts on the ground is that the rank and file of the Venezuelan military is acutely aware of the desperate economic conditions in the country and we think they look for ways to support [Guaidó]," he said.

Earlier on Monday, Guaidó, leader of the opposition-controlled national assembly which was stripped of its powers in 2017, said he was taking "progressive and orderly" control of PDVSA.

Guaidó, a 35-year-old who was unknown to most Venezuelans a month ago, also called for a two-hour strike on Wednesday "to demand that the armed forces side with the people," ahead of a planned national and international rally on Saturday.

Meanwhile, Maduro devalued the currency by 35% on Monday, aligning it with the black market dollar exchange rate. However an independent local consultancy firm said the move would not ease a severe cash shortage.

"The system won't correct the distortion," said Henkel García, a director of local consultancy firm Econometrica. "The country's most serious problem is the inadequate supply of dollars."

The escalating political and economic crisis has coincided with renewed social unrest as anti-government protests sweep the country.

According to non-profit group Venezuelan Program for Education-Action in Human Rights, 35 people have died since demonstrations began on January 21.