According to National Security Advisor John Bolton, the move will block some $7 billion in state assets, and represents around $11 billion in lost export revenue from the U.S. market.
That will deal a further blow to PDVSA.
The firm’s financial situation was already “on a knife-edge” with only about half of its crude oil exports generating cash revenues, said Eileen Gavin, senior politics analyst at Verisk Maplecroft, a risk consultancy.
The rest is shipped largely to China, as payment in kind for a decade of multi-billion dollar lending, Gavin said in a recent note.
While PDVSA will be able to find new markets for its crude, refineries in China and India are the “only ones” outside of the U.S. Gulf Coast with the capacity to refine Venezuela’s particular type of heavy, sour crude, according to Eurasia Group’s Grais-Targow.
The oil-rich South American country will likely seek to sell the crude oil at a discount to other Asian countries as well, traders told Reuters last week.
Under the new sanctions, U.S. companies can continue to purchase Venezuelan oil, but the payments must be held in an account that cannot be accessed by the Maduro regime.
Treasury Secretary Steven Mnuchin said PDVSA has long been used by officials and businessmen for embezzlement and corruption. The sanctions will prevent the nation’s oil wealth from being diverted to Maduro and will only be lifted when his regime hands control of PDVSA to a successor government, he added.
Venezuela is a major supplier of heavy oil, which is largely used to produce distillates like diesel and jet fuel.
— CNBC’s Tom DiChristopher and Reuters contributed to this report.