July 27 (UPI) -- Tightening sanctions on Venezuela could result in blowback on the U.S. economy by way of higher oil and gasoline prices, sector analysts said.
The U.S. Treasury Department sanctioned 13 current and former government officials in Venezuela for their role in Venezuelan President Nicolas Maduro's efforts to silence his opponents. Maduro's move could be strengthened after elections scheduled for Sunday.
"Anyone elected to the National Constituent Assembly should know that their role in undermining democratic processes and institutions in Venezuela could expose them to potential U.S. sanctions," Treasury Secretary Steven Mnuchin said in a statement.
Tightening sanctions further could strike a blow to the Venezuelan economy as energy represents about 95 percent of its export economy. The World Bank stated that Venezuela is already facing major economic challenges and the International Monetary Fund found that gross domestic product there has declined by about 25 percent over the last three years.
Venezuela is the sixth-largest producer among members of the Organization of Petroleum Exporting Countries, pumping 1.9 million barrels per day in June. The U.S. Treasury Department said the government's corruption extends into the oil sector, where in the ten years ending in 2014, about $11 billion "went missing" from state-owned oil company, Petroleos de Venezuela, known also as PDVSA.
The former vice president for finance at PDVSA, Carlos Erik Malpica Flores, was among those sanctioned by the U.S. government.
Patrick DeHaan, a senior petroleum analyst for price-tracker GasBuddy, said a potential ban on U.S. oil imports from Venezuela and PDVSA by U.S. President Donald Trump might have unintended consequences.
"If Trump tries to make it hard on PDVSA by tying them down, it could cause oil and thus gasoline prices to rally," he said in response to emailed questions. "That would clearly be a dire situation since Venezuela is one of the largest suppliers of crude oil to the United States."
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 is up 7.6 percent from last year and, for the week ending July 14, was up 7 percent to 669,000 barrels per day.
Citgo is a Venezuelan-owned refiner and gasoline retailer in the United States. The U.S. national average price for a gallon of gasoline is $2.29 per gallon and Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, told UPI tighter sanctions would be felt by U.S. travelers.
"U.S. refiners are fond of heavy Venezuelan crude, which they can handle better that light [domestic] shale condensate," he said. "A cut of Venezuelan exports would add about 15 to 25 cents a gallon to U.S. gasoline prices."