The United States has announced sanctions against three nephews by marriage of Venezuelan President Nicolás Maduro, six Venezuelan-flagged oil tankers, and shipping companies associated with them, amid ongoing political tensions between Washington and Caracas.
This latest move by President Donald Trump’s administration on Thursday came just a day after the U.S. military seized another oil tanker, the Skipper, off the coast of Venezuela.
The US also sanctioned Panamanian businessman Ramon Carretero, as well as the so-called “drug nephews” Franchi Flores, Carlos Flores and Efrain Campo.
Since September, the United States has carried out at least 21 raids on suspected drug smuggling vessels in the Caribbean, killing more than 80 people. While the White House has justified the attack as necessary to stem the flow of illegal drugs into the United States, political observers believe the goal is to oust President Maduro, especially since Venezuela is not a major drug source and the Trump administration has not provided evidence that any of the vessels were carrying illegal drugs.
So what kind of sanctions is the Trump administration imposing? Why does Washington sanction Venezuelan oil? And how does Chevron, the US oil major, continue to do business in Venezuela?
What new sanctions have been imposed on the Maduro family and the oil tankers?
Economic pressure on Venezuela has intensified, with the US Treasury imposing new sanctions targeting President Maduro’s family and the shipping network that facilitates the country’s oil exports.
Treasury Secretary Scott Bessent, who announced the move, said it was a shift in the Biden administration’s foreign policy strategy and aimed at cutting off funding to what the United States called a “corrupt narco-terrorism regime.”
The new designation focuses on the nephew of President Maduro’s wife, Cilia Flores. The US Office of Foreign Assets Control (OFAC) sanctioned the “drug nephews,” two of whom were convicted of drug trafficking in the US in 2016, but were pardoned by President Biden in a prisoner swap in 2022.
Also added to the sanctions list was Carlos Eric Malpica Flores, a former finance secretary and executive of the state oil company PDVSA.
U.S. authorities also named Panamanian businessman Ramon Carretero Napolitano and six shipping companies on suspicion of engaging in “deceptive practices” to secretly transport oil to Asian markets.
Six specific vessels were identified as ‘blocked properties’: White Crane, Chiara M, H Constance, Lattafa, Tamia and Monique.
The Treasury Department announced that the new sanctions were applied in addition to existing sanctions against President Maduro, his wife Flores, his son Nicolas Maduro Guerra, and Flores’ three sons Walter Gavidia Flores, Yosel Gavidia Flores, and Yozwal Gavidia Flores.
How do these sanctions work?
Essentially, the sanctions mean that the targeted individuals are barred from accessing any property or financial assets they hold in the United States. They cannot access U.S. bank accounts, sell their property, or access their own money if it passes through the U.S. financial system.
U.S. companies or nationals that do business with sanctioned individuals or companies risk being subject to penalties and enforcement actions.
Sanctions extend beyond the individuals on the list. Companies in which one or more of the blocked persons directly or indirectly owns 50% or more of the shares are also subject to sanctions, even if the company is not named.
Why is the Trump administration imposing sanctions on the Maduro family?
The Trump administration has accused the family of leading a drug cartel and overseeing drug trafficking in Venezuela.
The Treasury Department said in a statement that the nephews have been involved in cocaine trafficking since being pardoned by Biden in 2022.
The new sanctions also have domestic political benefits, as President Trump says they directly contradict the Biden administration’s diplomatic strategy toward Venezuela.
The Republican president argues that the previous administration’s attempts to provide sanctions relief, including removal from the terrorist list, fell short of bringing about democratic elections in Venezuela.
The sanctions signal President Trump’s return to a “maximum pressure” strategy and aim to dismantle the financial networks supporting President Maduro.
President Trump has been attacking Venezuela, a petrostate whose export earnings come from up to 95% of fossil fuels.
“President Maduro continues to deny the nation’s democratic values and refuses to recognize the will of the Venezuelan people. Therefore, it is in the foreign policy interest of the United States to maintain pressure on those associated with the Maduro regime,” the Treasury Department said in a statement.
Does that mean U.S. oil companies can’t do business in Venezuela?
No, not completely. Oil giant Chevron has managed to continue operating there.
Venezuela has the world’s largest proven oil reserves, with a production capacity of over 300 billion barrels.
But its reserves have declined sharply over the past three decades, since former President Hugo Chávez and then Maduro’s government took control of state oil company PDVSA.
Currently, Chevron is the only U.S. oil producer remaining active in Venezuela. The company received a license from President Biden in 2022 to operate outside of U.S. sanctions. The Trump administration extended further exemptions for the company this year.
Chevron, which is affiliated with PDVSA, accounts for about one-fifth of Venezuela’s official oil production.
Chevron has increased its shipments from 128,000 barrels per day (bpd) in October to 150,000 barrels per day (bpd) last month. The US group says PDVSA needs to recover billions of dollars it is owed in unpaid bills and property seizures.
What other sanctions does the United States already have against Venezuela?
The core of the US sanctions program is targeted financial and asset blockade measures. U.S. citizens and businesses are prohibited from doing business with various designated Venezuelan government officials, business leaders, and entities whose property and property rights are frozen in the United States unless authorized by OFAC.
In addition to individual sanctions, the United States has imposed broad sectoral restrictions on Venezuela’s economy, particularly on state oil company PDVSA and related oil exports. Since 2017, Washington has excluded the Venezuelan government from U.S. financial markets and prohibited the purchase of Venezuelan government bonds.
In 2019, sanctions were extended that freeze PDVSA assets in the United States, restrict U.S. companies other than Chevron from doing business with PDVSA, and prevent international partners from engaging in Venezuela’s oil sector.
U.S. policy also includes visa restrictions and travel bans on Venezuelan officials and associates whom it accuses of undermining democracy or being responsible for human rights abuses.
The United States also imposed sanctions on shipping and shipping businesses related to Venezuela’s oil trade, including the designation of ships and shipping companies that transport Venezuelan crude oil.
Since Mr. Trump returned to office earlier this year, the United States has added to its terrorism designation a group of Venezuelans it says are involved in drug trafficking and broader criminal networks. These designations have their own financial and legal restrictions and often intersect with existing economic sanctions.
In November, the U.S. government designated Venezuela’s Cartel de los Soles as a terrorist organization, claiming that the organization, which is accused of drug-trafficking operations, is overseen by President Maduro himself.
How have sanctions affected Venezuela?
US sanctions against Venezuela contributed to the most severe economic collapse in modern history outside of a war zone.
In the late 1990s, Caracas produced 3.6 million barrels of oil per day and generated 95% of its export revenue. But U.S. sanctions and years of mismanagement have pushed production below 1 million barrels a day.
As a result, tax revenue from oil revenues, an important source of government revenue, has decreased significantly. Inflation eventually exceeded 1 million percent in 2018 as the central bank printed more money to cover budget shortfalls and the price of imported goods soared.
Venezuela defaulted on its commercial debt in 2017. Together with bonds issued by PDVSA and state-owned power company Elecar, the government has about $92 billion in debt. Another $57 billion is owed to China and various arbitral awards.
Overall, Venezuela’s debt-to-GDP ratio is estimated at 148 percent.
During Biden’s presidency, the United States temporarily lifted some sanctions, particularly on oil and debt, under the 2023 Barbados Agreement in exchange for political guarantees, including the holding of free and fair elections and the release of detained Americans.
The agreement gave Venezuela an additional $740 million in oil sales. But Maduro has since blocked his main opponent, Maria Colina Machado, who remains in hiding and won this year’s Nobel Peace Prize, from running for office, and Biden reimposed U.S. sanctions in April 2024.
But experts suggest that sanctions actually helped Maduro maintain power to some extent. Venezuelan authorities have moved towards an illegal “black market” economy using shadow fleets to transport oil. As a result, it has strengthened a loyal circle of military and business elites who benefit from avoiding sanctions and returning support to Mr. Maduro.
Is there a way to avoid these sanctions?
There are countless methods that Venezuela under Maduro has employed to circumvent U.S. sanctions.
Caracas works with other sanctioned countries, such as Iran, to use a “shadow fleet” of older, less regulated oil tankers to transport crude oil to buyers such as Chinese refiners.
These vessels often have their Automatic Identification System (AIS) transponders switched off, use falsified tracking data, change their name or flag, or operate under opaque ownership structures in jurisdictions that do not strictly enforce sanctions.
They aim to hide the true origin and destination of the oil and obstruct sanctions enforcement. The Skipper, seized by the United States this week off the coast of Venezuela, is believed to be part of a network of tankers smuggling oil to countries facing tough sanctions, including Venezuela, Russia and Iran.
According to Reuters, Venezuelan crude shipped to China is sometimes labeled as Brazilian crude or has its certificate of origin relabeled, allowing carriers and buyers to avoid tagging that would flag the cargo as subject to U.S. sanctions.
Transshipment at sea or at intermediate ports is another way to avoid detection, as sanctioned cargo can be switched from one vessel to another that is not on the sanctions list.
Some sanctioned companies are reported to use shell companies and intermediaries in tax havens to obscure beneficial ownership and make it difficult for sanctions regulators to trace transactions.
In recent years, Venezuelan authorities have reportedly been using virtual currencies to facilitate transactions and access foreign currency. While this is not a direct replacement for large oil export revenues, it reflects a broader way to access value outside of formal financial structures controlled by the United States.
