If you are a compliance officer at an international bank that either serves Venezuelan companies or nationals in the petrochemical industry, be advised that rumors are circulating to the effect that OFAC may sanction the Venezuelan national oil company, PDVSA. Whether the sanctions will only affect contracts to sell petroleum products to US Government agencies, and the military, or a blanket ban on the sale of all Venezuelan oil to US entities and individuals, is not known, but some action is expected.
A total ban on sales of Venezuelan oil to the US could totally disrupt the moribund Venezuelan economy, which relies upon those petrodollars, the only reliable national export, to keep the regime afloat. It could also push Venezuela into default of its obligations, destroy many of those domestic companies that depend upon oil revenue, and raise Country Risk so high that financial transactions with Venezuelan companies would reach an unacceptable level. On the other hand, the US imports approximately eight per cent of its oil needs from Venezuela; could American oil fill in the gap, or will other producers step in ?
Be alert for any new OFAC sanctions this week, as they may involve your bank clients, or their customers.