Trump Administration Prepares New Sanctions to Breakup Venezuela-Iran Fuel Trade

President Trump wants to dismantle fuel trading between Venezuela and Iran by targeting tankers and the companies that operate them with strict sanctions.

U.S. sanctions have crippled Iran and Venezuela over the past few years. It’s turned the two countries into unlikely allies. Trade between the countries has helped keep their economies afloat. However, the U.S. is beginning to tighten the noose on the flowering trade relationship. Reports indicate the U.S. is preparing significant economic sanctions against dozens of tankers and tanker operators that have transported goods between the two countries.

According to unnamed sources cited by the Wall Street Journal, the Treasury Department’s Office of Foreign Assets Control is preparing to blacklist as many as 50 tankers to its blacklist over their dealings with Venezuelan President Nicola Maduro’s government. Last week, Treasury announced sanctions against four firms and their vessels for working within the Venezuelan oil trade. The State Department also used sanction threats last month to convince two Greek-owned tankers to abandon plans to ship Iranian fuel to Venezuela.

What This Means

The uptick in tanker sanctions indicates that the U.S. is expanding its efforts to disrupt trade between its two adversaries. The tanker sanctions should help the U.S. maximize pressure on Iran and Venezuela without provoking a full-blown military confrontation. Targeting private operators that run logistics between the two countries could ultimately be more effective than targeting the countries themselves. Firms that are willing to ship goods between the two countries run the risk of being cut off from the global financial system. So, the Iranian and Venezuelan governments will have a hard time finding operators that are willing to help them.

Despite having one of the richest oil reserves on the planet, Venezuela is in desperate need of fuel. Five Iranian tankers made fuel deliveries to Venezuela over the past few weeks. However, they only delivered enough to satisfy the country’s demand for a few weeks. However, both Iranian and Venezuelan leaders said they’re planning more deliveries in the near future. Also, President Maduro says he wants to lock down a trade deal with Iran when he travels to Tehran on an upcoming trip.

Effects of the Sanctions

The U.S. sanctions against Iran have proven to be very effective. Two years ago, Iran was exporting roughly 2.5 million barrels of crude oil per day. In April, the country’s exports fell to only 70,000 barrels per day, according to the Wall Street Journal. The State Department’s efforts have also resulted in over 150 Iranian tankers losing their registration to travel through international waters.

Sanctions against Iran and Venezuela have become increasingly tight over the past few years. Additionally, the two countries have relied on the private sector to help them overcome the supply chain gaps. However, new U.S. sanctions targeting private operators could spell more difficulties for the sanction-racked economies of Iran and Venezuela. Few private operators are willing to risk drawing the wrath of the U.S., so it won’t be easy for the two countries to find companies that are willing to ship goods between them.

Strangling off the burgeoning trade relationship between Iran and Venezuela will help increase the effectiveness of U.S. sanctions. Ideally, the resultant economic pressure will force the unfriendly governments of the two countries back to the negotiating table. The U.S. hopes the expanded sanction policies against private sector operators can help it accomplish its goals without the use of military force.

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