Takeaway: Despite media report that suggests coming sanctions, White House not interested in new actions that could raise gasoline prices.

Editor's Note: Below is an excerpt from a research note published by Senior Energy Policy analyst Joseph McMonigle. To read our Energy Policy research email sales@hedgeye.com.

US Sanctions on Venezuela Oil Off The Table - trump venezuela

The Trump Administration has dropped any immediate plans to impose sanctions on Venezuela oil sales until at least after the US mid-term election, according to our ongoing assessment and discussions with administration officials.

McClatchy News reported on August 24 that US sanctions on Venezuela oil were being “actively discussed” by the Trump Administration citing two unnamed senior officials.

In our view, the White House is spooked by high gasoline prices this summer after re-imposing Iran oil sanctions and does not want to take any further actions that could spike prices.

Certainly, the administration remains very concerned about Venezuela and is increasing talks with allies in Latin America on the situation as evidenced by Defense Secretary Mattis’ recent tour through the region last month.

However, based on our assessment, there are zero plans to impose US sanctions on Venezuela oil – at least until after the US election. 

We can certainly see some additional targeted sanctions on Venezuela that could include a ban on diluent sales from the US to Venezuela. However, should some administration officials want to pursue sanctions on Venezuela oil, we strongly believe Trump himself would nix any such action.

Also, regarding the “until at least after the election” timeline, we believe the window is much longer due to the fact that Iran oil sanctions become effective the same week of the US mid-term election that should send oil prices higher in November and end of Q4.