(Adds details, background, reaction throughout)
By Matt Spetalnick
WASHINGTON, July 30 (Reuters) - The Trump administration is considering imposing U.S. sanctions on Venezuela’s vital oil sector in response to Sunday’s election of a constitutional super-body that Washington has already denounced as a “sham” vote, U.S. officials said.
The measures, which could be announced as early as Monday, are not expected to include a ban on Venezuelan oil shipments to the United States — one of the harshest options — but could block sale of lighter U.S. crude that Venezuela mixes with its heavy crude and then exports, the officials told Reuters.
While no final decisions have been made, the officials, who spoke on condition of anonymity, said the United States could also target further senior Venezuelan officials. But the timing of any new individual sanctions, such as those imposed on 13 Venezuelan figures last week, remained uncertain.
Other options still under consideration, the officials said, include various measures to restrict access by the Venezuelan government and state oil company PDVSA to the U.S. banking system, the sources said.
But it was not clear whether the U.S. administration was ready to take such action or would instead hold it in reserve if further escalation is deemed necessary following the Venezuelan ballot, which was widely boycotted and sparked deadly protests. Washington has backed the Venezuelan opposition’s view that the vote is intended to cement dictatorship.
The new round of sanctions is intended to make good on President Donald Trump’s threat of “strong and swift economic actions” if Venezuelan President Nicolas Maduro went ahead with Sunday’s election of a controversial new congress, the officials said.
But the U.S. response, though expected to be the toughest yet against Maduro’s leftist government since Trump took office, is also being calibrated to avoid causing further suffering to the Venezuelan people or seriously damaging U.S. economic interests, the officials said.
The White House did not immediately respond to a request for comment.
The United States is the biggest customer for Venezuela’s oil and any major sanctions on its energy sector would deny Maduro cash-strapped government the hard currency it needs.
But U.S. policymakers are also mindful of the risk of increasing U.S. domestic gasoline prices and causing problems for PDVSA’s U.S. refining subsidiary Citgo.
Despite that, an option that has gained favor within the administration would call for a ban on exports to Venezuela of lighter U.S. crude that the South American country uses to dilute its heavy crude in processing it for export, one of the U.S. officials said. The United States bought 780,000 barrels per day (bpd) of Venezuelan crude and refined products in the first four months of 2017, according to the Energy Information Administration, nearly 8 percent of total imports. But Venezuela also imported 75,000 barrels per day (bpd) of refined products directly from the United States last year, according Energy Information Administration figures. Such imports grew to 87,000 bpd this year (Jan-Apr), it said.
PDVSA also buys U.S. light crude from the United States through its storage facility of Bullenbay in Curacao. Last year it bought 30,000 bpd of U.S. oil, this year (January-April) it has bought 19,000 bpd of WTI and DSW crudes mainly to be refined at Isla refinery.
U.S. Ambassador to the United Nations Nikki Haley on Sunday called Venezuela’s election a “sham” and “another step toward dictatorship,” saying the United States would not accept an illegitimate government in Caracas,
Brazil, Argentina, Peru and Chile also slammed the Maduro government for violating democratic norms and ignoring pleas from the international community to cancel the assembly plan.
Argentina said it would not recognize the results of what its Foreign Ministry called an “illegal election” and Brazil, Peru and Chile called for steps to restore dialogue and move toward the renewal of democracy.
“This election violates the Venezuelan constitution’s norms and contravenes the sovereign will of the people as represented in the National Assembly,” the Peruvian Foreign Ministry said.
“The Brazilian government condemns the destruction of the constitutional freedom to demonstrate and repudiates the kind of violent repression by state forces and paramilitary groups of the kind we saw throughout the day,” the Brazilian Foreign Ministry said.
Reporting by Matt Spetalnick; Additional reporting by Marianna Paraga in Houston, Maximiliano Rizzi in Buenos Aires, Ursula Scollo in Lima, Dan Flynn in Sao Paulo and Rosalba O'Brien in Santiago; Editing by Sandra Maler