Venezuela’s foreign currency revenues—almost all of which come from crude oil sales—have plunged by 99 percent since 2014, Nicolas Maduro said, blaming most of the losses on the “persecution and criminal blockade” of Venezuela’s oil exports.

“In six years of persecution and criminal blockade against Venezuela, the country lost 99 percent of its foreign currency income,” Maduro said on Twitter, sharing a graph showing that Venezuela’s foreign currency income slumped from US$56.6 billion in 2013 to just US$477 million as of September 28, 2020. The decline of 99 percent was attributed in the graphic to the drop in oil prices in that period and the ‘blockade’ of Venezuela’s oil exports. 

Venezuela’s exports have significantly slumped since the U.S. imposed sanctions on its crude oil exports in early 2019, essentially prohibiting U.S. refiners from buying Venezuelan crude, which was a large part of the imports of crude for U.S. Gulf Coast refiners.

U.S. sanctions have exacerbated the already dire state of the Venezuelan oil industry, which is suffering from years of mismanagement, corruption, lack of investment, and the inability of the financially weak state oil firm PDVSA to invest in new production or find customers willing to risk secondary U.S. sanctions if they purchase Venezuelan oil. 

Venezuela’s oil production and exports have been in freefall for several years, but the U.S. sanctions on its industry and exports, the crash in demand, and the COVID-19 pandemic further accelerated the decline.

Venezuela’s oil industry was collapsing even before the oil price crash and the pandemic, due to the increasingly stricter sanctions in the U.S. maximum pressure campaign against Maduro’s regime and its sources of revenues. Oil income is pretty much the only hard currency that Maduro gets, so the U.S. is looking to stifle as much of Venezuela’s oil trade as possible. 

At the end of August, U.S. Special Representative for Venezuela Elliott Abrams told Reuters in an interview that the U.S. Administration is considering a tightening of the sanctions against Venezuela in the near future. 

By Michael Kern for Oilprice.com

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