On the final weekend of July, the beleaguered President of Venezuela Nicolás Maduro defied the Organization of American States and held a constitutional referendum that could give him considerable power to rewrite the constitution of the oil-rich South American nation.
More than a dozen people died in violent protests as people ostensibly headed to the polls and President Maduro claimed an extremely dubious victory. Venezuela has suffered through unprecedented chaos over the last few years as the so-called Bolivarian Revolution has shattered the economy. Public services are barely operating at a time when people can no longer find groceries on store shelves, and the national currency has plunged to worthless level. Amazingly, Venezuela still manages to produce 700,000 crude oil barrels each day, nearly all of them destined for export activities.
Weeks before the referendum vote, United States President Donald Trump warned that strong economic measures could be taken against President Maduro if he actually conducted the controversial and shambolic referendum. White House officials have commented that one option being considered by the Trump administration includes a full embargo on Venezuelan oil; such a drastic move would be a devastating blow to the people of that South American country, but it may just succeed to push for a concerted effort to remove President Maduro from power.
The effects of a full oil embargo against Venezuela will also be felt by American drivers when they visit local gas stations. Venezuela is a member of the Organization of Petroleum-Exporting Countries, a bloc that had already planned to boost the price of crude oil so that it can once again reach levels near $60 and $70 per barrel. Americans may also face the prospect of thousands of Venezuelans fleeing to the U.S. and seeking asylum as their economy further collapses.
An even more concerning issue is CITGO, an American oil company that is mostly owned by the Venezuelan government. Nearly half of CITGO has been pledged by Venezuela as collateral on a loan granted by the Russian government; political analysts believe that Venezuela will default on this loan, which would give the Kremlin control over the oil company and a strong economic foothold in the U.S.
Given the critical situation in Venezuela, the United States should weigh all options very carefully. CITGO being owned by Russian state oil company Rosneft would be calamitous at a time the Trump administration is being investigated for alleged improper ties to the Kremlin.