Oil prices rebounded on Tuesday, as the United States slapped sanctions against Venezuela's state-owned oil company to pile financial pressure on Venezuelan President Nicolas Maduro through curbing the country's crude exports.
The White House announced the sanctions against Petroleos de Venezuela, S.A., or PDVSA, during a Monday briefing, which the U.S. Treasury described it as "a primary source of Venezuela's income and foreign currency."
As the PDVSA provides an overwhelming majority of Venezuela's oil exports, the measure will block 7 billion U.S. dollars in assets and could result in 11 billion dollars in lost sales over the next year, said U.S. national security adviser John Bolton during the White House briefing.
Any purchases of Venezuelan oil by U.S. entities would flow into blocked accounts. Relevant money would be released only to Venezuela's legitimate leaders, according to the White House.
U.S. President Donald Trump recognized Venezuelan opposition leader Juan Guaido as Venezuela's legitimate interim president last week, denouncing incumbent President Maduro who won the elections last year with over two thirds of the votes.
The United States is Venezuela's biggest oil customer, importing about 500,000 barrels per day of crude in 2018, according to Reuters.
PDVSA is also the parent company of the Huston-based petroleum company Citgo and holds the majority stake of Citgo, also a refiner and transporter of fuels and other industrial products.
Investors are worried that the latest sanctions would negatively impact U.S. purchasers and send global oil prices soaring.
The West Texas Intermediate for March delivery bounced 1.32 U.S. dollars to settle at 53.31 dollars a barrel on the New York Mercantile Exchange, while Brent crude for March delivery rose 1.39 dollars to at 61.32 dollars a barrel on the London ICE Futures Exchange.