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After a meeting with his national security team Friday night, President Trump said “we have many options for Venezuela” adding “I am not going to rule out a military option.” Trump’s full comments are available here (the Venezuela comments start at the 8:57 mark).
Contrast Trump’s comments with those made earlier on Friday by Venezuela President Nicholas Maduro, who said “Mr. Donald Trump here is my hand” in a speech to his new Constituent Assembly that the US has called “illegitimate.”
We believe one of the “many options for Venezuela” includes energy sanctions on Venezuela crude exports to the US – an option developed and strongly supported by the National Security Council staff. We do not believe military action is under consideration but instead should be viewed that Trump is considering tougher US sanctions.
So far the US Treasury Department has imposed sanctions on Maduro and 21 individuals in the Venezuela regime.
We will be watching carefully for Maduro’s response to Trump and believe a bellicose comment will escalate bilateral tensions and serve as a potential catalyst for energy sanctions.
We are also closely watching two other events in the next few days. The White House announced today that Trump will briefly return to Washington on Monday but offered no explanation for the trip. It could mean a Presidential announcement from the White House on Venezuela but certainly could be on another topic.
In addition, Vice President Pence departs for a South America trip on Sunday stopping first in Colombia. Venezuela will no doubt be a major topic of discussion.
Our first client note on July 17 raising our view about likely energy sanctions is out of consensus but nothing since has diminished our confidence in the call. On Thursday, McClatchy News wrote a story that received considerable attention saying that tougher economic or energy sanctions were being stalled by a highly respected top diplomat in the State Department. Click here for the full McClatchy article.
In our July 17 note, we discussed the disagreements within the administration on energy sanctions, including opposition from the State Department. While we also personally respect the State Department official, we would discount opposition from the State Department. Our view is that the White House is now taking the lead on both Venezuela and Iran.
