“I said the second one is better,” said Russ Dallen, a managing partner at the U.S. investment bank Caracas Capital Markets, which tracks Venezuelan oil shipments, who advised U.S. officials on this issue. “I said, ‘Look, they’re killing themselves anyway. If we get involved right now, they’re going to try to blame us. They already are, but when your opponent is shooting themselves in the foot, don’t stop them.”


In the short term, blocking U.S. oil sales could choke the Caracas regime’s production capabilities. In the long term, Venezuela would still be able to produce oil by getting the commodities elsewhere, like Russia or China, but Dallen said it would cost the state-run company, PDVSA, more because they’d have to find and buy those products for more elsewhere. Venezuela could also get around the sanctions by, for example, buying the U.S. products from a third country.


Venezuela could still count on $28 billion in oil revenues if it received full value, or about $60 a barrel, for its 1.3 million barrels a day. Dallen’s analysis shows it is really only making about $11 billion a year because half of the oil produced is delivered at a loss or as a loan repayment to China and Russia, several hundred thousand more barrels are delivered to Cuba at no cost and some also is donated domestically for cheap gas programs. U.S. refiners are among the few customers that actually pay the Venezuelans cash for their oil.

“The U.S. is pretty much the only country keeping the lights on in Venezuela,” Dallen said.