Oil sanctions will not bring rapid change in Venezuela

Significance

President Nicolas Maduro’s beleaguered government will seek to sidestep sanctions on the Venezuelan oil sector announced by the United States on January 28. Some technical aspects of the sanctions remain unclear, but the move will most immediately impact Caracas’s access to dollars and bilateral energy supplies.

Impacts

• The US squeeze on the Venezuelan economy risks exacerbating social crisis and migratory outflows.
• Russia and China will continue to align with Maduro.
• The impact on international oil markets will be modest given already collapsed Venezuelan output.