President Donald Trump and his administration have placed sanctions on Venezuela’s oil as a show of U.S. support for Juan Guaidó and his claims against Nicolás Maduro.
However separating the U.S. from the supply from Venezuela could have some harsh effects on gas prices here at home. To address that Treasury Secretary Steven Mnuchin had some words to reassure the public that it oil prices could be managed.
“Many of our friends in the Middle East will be happy to make up the supply as we push down Venezuela’s supply,” Mnuchin claimed.
Unfortunately a similar oil ban on Iran caused some fallout with Saudi Arabis that has likely not been forgotten so soon.
When the Trump administration levied sanctions on Iran, President Trump leaned on Saudi Arabia to increase oil output so that there would be a reliable supply. But then the same administration turned around and granted allowances for several countries permitting them to buy from Iran.
This left Saudi Arabia with a glut of oil, causing the price to drop. The country reacted by joining an OPEC pact with Russia to slash production and bolster prices. That relationship has held strong and is unlikely to change now.
According to Amy Myers Jaffe, director of the program on Energy Security and Climate Change at the Council on Foreign Relations, “The days when the U.S. had a hotline directly to Saudi Arabia on oil policy are over.”