President Trump designated Venezuela a "foreign terrorist organization" Tuesday and formally ordered a blockade of all U.S. sanctioned oil tankers servicing the country.
Why it matters: Trump's newest escalation, backed by a giant U.S. armada, exerts unprecedented pressure on Venezuelan leader Nicolás Maduro's regime, threatening to bankrupt the country's already struggling economy.
- "Venezuela is completely surrounded by the largest Armada ever assembled in the History of South America. It will only get bigger, and the shock to them will be like nothing they have ever seen before," Trump said on Truth Social.
Zoom in: About 18 tankers under U.S. sanctions that are fully loaded with oil currently lie within Venezuelan waters and eight are classified as "Very Large Cargo Container" ships like the tanker, called the Skipper, that the U.S. seized last week.
- Axios first reported Tuesday morning that the U.S. is monitoring those vessels and plans to seize them as soon as they move into international waters.
- The Trump administration plans to start sanctioning more vessels by placing them on the U.S. government "Specially Designated Nationals" list, which the administration began doing last week as well.
- About 712 vessels worldwide are on the SDN list, according to Samir Madani, co-founder of the firm Tanker Trackers that monitors global shipping. Nearly 40 are currently in Venezuelan waters, he said, including the 18 that are loaded with Venezuelan oil.
What they're saying: "Venezuela, in national unity, condemns Donald Trump's military threat and will defend its rights to free trade, navigability, free development, sovereignty and national independence," Venezuelan Vice President Delcy Rodríguez said on Telegram Tuesday.
- Rodríguez shared a statement from Maduro's ruling party, saying: "On his social media, he assumes that Venezuela's oil, land, and mineral wealth are his property.
- "Consequently, he demands that Venezuela immediately hand over all its riches. The President of the United States intends to impose, in an utterly irrational manner, a supposed naval blockade on Venezuela with the aim of stealing the wealth that belongs to our nation."
The intrigue: At least two oil companies who once had business in Venezuela have made inquiries with the U.S. government about the fate of the nearly 1.9 million barrels of Venezuelan crude seized last week on the vessel Skipper, a source told Axios, declining to name names.
- The Skipper's oil is valued by experts at about $95 million.
- Last year, a U.S. federal court approved $20.8 billion in claims from a number of companies that sued Venezuela. The source declined to say if any of these companies seek the Skipper's oil or proceeds.
Of note: Trump obliquely referenced these claims in his statement that said the "illegitimate Maduro Regime is using Oil from these stolen Oil Fields to finance themselves, Drug Terrorism, Human Trafficking, Murder, and Kidnapping."
- "For the theft of our Assets, and many other reasons, including Terrorism, Drug Smuggling, and Human Trafficking, the Venezuelan Regime has been designated a FOREIGN TERRORIST ORGANIZATION," Trump wrote.
Reality check: Trump incorrectly suggested in his statement that Venezuela stole "Oil, Land, and other Assets" from the U.S. government.
The big picture: The new designation of the Venezuelan government as a "Foreign Terrorist Organization" bears two major implications
- It creates more of a pretext for direct military action in Venezuela,
- It smooths the way for U.S. personnel to sanction, stop or seize any vessel carrying Venezuelan oil.
Between the lines: Including sanctioned and un-sanctioned vessels in Venezuela's waters, experts estimate that as many as 11 million barrels of oil are waiting to be shipped.
- "When there's a nexus between oil profits and a foreign terrorist organization, government lawyers have been more inclined to place them on a sanctions list," Eddie Fishman, a Columbia University expert on energy and sanctions, told Axios.
- By enforcing the sanctions with the U.S. military, Fishman said, the Trump administration is essentially "converting economic warfare into actual military warfare."
More from Axios:
- Why oil is chill despite rising heat on Venezuela
- Trump sanctions Maduro's nephews, 6 ships carrying Venezuela oil
- "Quite a buffet": U.S. ready to seize more tankers with Venezuelan oil
Editor's note: This article has been updated with additional details throughout.
