The Trump administration on Tuesday sanctioned a subsidiary of Russia’s largest oil company, Rosneft, for helping Venezuela’s President Nicolas Maduro to evade US sanctions.
The US Treasury Department announced the sanctions on Rosneft Trading, the Swiss-incorporated subsidiary of Russian state-controlled global energy giant Rosneft Oil.
The Treasury accused the subsidiary of operating in Venezuela's oil sector, and between last August and January, sending shipments of four million barrels of crude oil from Venezuela to West Africa and Asia, as well as 55 million barrels of oil lifting.
Didier Casimiro, the chairman of Rosneft Trading, was also sanctioned.
“As the primary broker of global deals for the sale and transport of Venezuela's crude oil, Rosneft Trading has propped up the dictatorial Maduro, enabling his repression of the Venezuelan people,” US Secretary of State Mike Pompeo said.
But US special representative for Venezuela, Elliott Abrams, said on Tuesday that Mr Pompeo told Russian Foreign Minister Sergey Lavrov of the sanctions when they met in Munich on Friday.
Mr Abrams said “deep divisions” continued to exist between the US and Russia on Venezuela, and that the only way out was “to stop doing business with the Maduro regime and allow a democratic transition".
Shares in Rosneft tumbled after the announcement but US officials did not expect a blow to the global oil market.
Andrew Bishop, head of research at Signum Global Advisers, expected the sanctions effect to be contained in the company.
Mr Bishop said this was because of the US inclusion of a general licence offering a three-month wind-down period, the fact that the US government had gone to great lengths to specify that the sanctions only applied to Rosneft Trading, not Rosneft Oil, and reports suggesting that Rosneft had already begun to shift its trading business away from Geneva towards Asia.
But the move is expected to hurt Venezuela’s teetering economy and the Maduro regime’s ability to export oil.
Those exports already plummeted by 32 per cent in 2019, and Russia’s Rosneft “was the largest receiver and intermediary of Venezuelan oil with 33.5 per cent of total exports”, Reuters reported.