July 21 (UPI) -- If the U.S. government opts for a ban on crude oil imports from Venezuela, it would likely disrupt markets along the U.S Gulf Coast, analysis finds.
U.S. President Donald Trump this week vowed to put economic pressure on Venezuela in response to President Nicolas Maduro's crackdown on his opponents. "All options" are on the table, including a ban on imports of crude oil from Venezuela, the U.S. government said.
A member of the Organization of Petroleum Exporting Countries, the export ban would be a blow to the Venezuelan economy as energy represents about 95 percent of its export economy. An April estimate from the International Monetary Fund found that gross domestic product in Venezuela has declined by about 25 percent over the last three years.
According to the World Bank, Venezuela is facing major economic challenges already.
Rick Joswick, managing director of oil markets for PIRA Energy Group, said a full ban on exports could have a negative impact on the U.S. refining market.
Venezuela is the third-largest exporter of crude oil to the United States, behind Canada and Saudi Arabia. The four-year average for Venezuelan imports by the United States is down 6 percent from last year, while imports from Canada, the No. 1 oil supplier to the U.S. market, are up 11.4 percent.
Joswick said that Gulf Coast refinery market is in flux as it is and some refineries there last year imported more crude oil from Venezuela than any other one in the United States.
"We're out of balance right now and [sanctions] would make us more out of balance," he said in a report emailed to UPI.
Refiners would likely adjust, however, if the U.S. government takes a softer stance by imposing a duty on Venezuelan oil imports.
Outside of the direct impact to the Americas, the ban could have a spillover effect on the appetite among OPEC members to draw down production figures in an effort to offset supply-side strains left over from last year.
Venezuela is the sixth-larger producer among OPEC members, pumping 1.9 million barrels per day in June.