Venezuelan President Nicolás Maduro attends a rally with his wife in Caracas, Venezuela, on Jan. 23. (Miraflores Palace/Reuters) (Handout/Reuters)

As tensions between the United States and Venezuela escalate, Venezuelan President Nicolás Maduro would appear to have an obvious tool to push back against American pressure: oil.

American oil refiners based on the Gulf Coast still rely on supplies from Venezuela to keep their operations running efficiently. As of early 2019, about 500,000 barrels per day of Venezuelan crude were being imported to the United States. “Venezuelan oil is essential to diesel production in the U.S.,” said John Kilduff of Again Capital, an investment firm.

But Venezuela’s economic collapse has made it virtually impossible for Maduro to use oil exports as a diplomatic weapon.

“Seventy-five percent of cash-generating oil exports are coming here,” said Scott Modell, the managing director of Rapidan Energy and a former CIA officer in Latin America. Though Venezuela exports considerable amounts of crude oil to major diplomatic allies like Russia and China, almost all of the profits are used to service preexisting debts. “They don’t get cash for that, and they are desperate for cash,” Modell said.

Shannon O’Neil, an expert on Latin America at the Council on Foreign Relations, said that stopping exports or other making attempts at hitting back at the United States economically would also have “a cut-off-your-nose-to-spite-your-face quality" and produce a “negative asymmetrical effect — hitting Venezuela much harder than the U.S.,” O’Neil wrote in an email to The Washington Post.

Energy markets seemed to agree on Thursday: Oil prices rose slightly, and there was little immediate effect on U.S. refinery stocks — a change from past crises in Venezuela, which rattled American refinery companies.

One potentially complicating matter is the fate of Citgo, a U.S.-based refiner that has been majority-owned by Venezuela’s national oil company, Petróleos de Venezuela (PDVSA), since 1990. The company has long operated as an independent entity and only repatriates dividends from current earnings, rather than revenue, to the Venezuelan company.

Citgo’s ownership has long been a source of tension between the United States and Venezuela. In August 2017, the Trump administration signed an executive order that blocked the repatriation of dividends, and sanctions on Venezuelan officials have placed Citgo in an increasingly fraught position.

Just under half of PDVSA’s shares in the company were used as collateral for a $1.5 billion loan the Venezuelan government took out from Russian energy giant Rosneft in 2016. Foreign creditors have suggested they may try to acquire parts of Citgo to service their debts.

Modell said that there is debate in the United States about whether the U.S. government could seize the company itself. Some opposed this, arguing that Citgo should be an asset available for a post-Maduro Venezuela that could help provide a “petroeconomic recovery” for the ailing country.

“On the other hand, people see it as something that still is a revenue generator for Maduro,” said Modell, who favors a U.S. seizure of Citgo.

The United States, which has recognized opposition politician Juan Guaidó as Venezuela’s interim president, could have the option of seizing assets — including those of the oil industry — from Maduro’s government and redistributing them to the opposition-dominated National Assembly.

“I think it’s time now for the legal implications to be implemented,” said Moises Rendon, a fellow at the Center for Strategic and International Studies. "Once that happens, Maduro really won’t have much room to maneuver.”

This post has been updated with additional information about Citgo.

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