Despite nearly two decades of sour relations with Venezuela, the United States has enormous leverage as one of its most important customers and as one the few countries with refineries capable of processing poor-quality heavy crude.
The Maduro regime is already tottering, struggling to meet its financial obligations, feed its people and pay its oil workers, soldiers and police officers. Additional American sanctions could be a devastating economic blow, prompting the country to move further toward dictatorship and toward an even closer embrace of China and Russia.
The result could be more violent strife or even a military coup. And shock waves across the hemisphere could create more complications for the Trump administration as it tries to focus on Iran and North Korea.
“It’s complicated,” said David L. Goldwyn, who was a top State Department energy envoy in the Obama administration.
“Tough sanctions could lead to a default on their bonds and a collapse of internal investment and oil production,” he added. “Other impacts could include civil unrest, refugee flows across their borders, and a cutoff of Venezuelan financial support to Cuba and Haiti that could lead to migration flows to the United States.”
There is also the potential for collateral damage to the United States.
Any trade embargo could raise gasoline prices, cost jobs in the oil patch and dampen profits for several major refiners. A decrease in Venezuelan exports could raise global oil prices, bolstering the economies of Russia and Iran just as Washington prepares to ratchet up sanctions on those countries.
In briefings, administration officials would not speculate on what would come next, but they emphasized a…