By Timothy Gardner and Vivian Sequera
WASHINGTON/CARACAS (Reuters) – President-elect Donald Trump’s choice of U.S. Senator Marco Rubio as secretary of state could signal tougher enforcement of oil sanctions on Iran and Venezuela, but concerns about retaliation by China could could dampen all efforts, analysts said Wednesday.
Rubio, a longtime member of the Senate Foreign Relations Committee, has long pushed for a tougher U.S. policy toward Iran and China. Rubio, whose parents emigrated to the US from Cuba, is also a critic of Venezuela’s socialist President Nicolas Maduro, whose two re-elections have been contested by Washington, leading to oil sanctions on the OPEC nation.
Iranian oil production has been the target of successive waves of sanctions, and during Trump’s first term, oil exports from OPEC’s third-largest producer slowed to a trickle.
They have risen during President Joe Biden’s term as analysts say sanctions have been enforced less stringently, Iran has managed to evade them and as China has become a major buyer, according to industry trackers.
“Senator Rubio has a consistent and strong record as a hawk against Iran, Venezuela and China,” said Bob McNally, president of Rapidan Energy, who was an energy adviser to former President George W. Bush.
Rubio will “zealously implement President-elect Trump’s plans to put pressure on Iran’s crude oil exports, almost all of which go to China,” a trend that increased under Biden, McNally said.
A crackdown on sanctions risks upsetting China, which could retaliate in several ways, including reducing the dollar’s primacy in oil trading, said Kevin Book, an energy policy analyst at the nonpartisan ClearView Energy Partners.
Trump referred to China and the risks to the dollar from sanctions in a September speech to the New York Economic Club.
SANCTIONS VERSUS OBJECTIVES
Kimberly Donovan, a sanctions and anti-money laundering expert at the Atlantic Council, said Washington has strong existing sanctions that Rubio could push foreign partners to enforce. But sanctions are only one national security tool and not always the best one, Donovan said.
“The next Trump administration will have to determine what their foreign policy goals are and then decide whether sanctions will help them achieve their goals,” Donovan said.
No official leads the implementation and enforcement of sanctions, and Rubio should serve at Trump’s pleasure. The Departments of State, Treasury and Trade typically work with counterparts in Europe and Asia on sanctions.
The Trump administration will seek to maintain these ties as it will likely seek to use the authorities in the US Stop Harboring Iranian Petroleum (SHIP) Act of 2024, Book said. The law, which the Biden administration did not strictly enforce, allows the imposition of measures on foreign ports and refineries that process oil exported from Iran in violation of U.S. sanctions.
“Using new authorities to go after those ports would require a lot of new determination from the new administration, but it could likely result in some Iranian barrels being curtailed,” Book said.
VENEZUELA
Rubio’s appointment means an improvement in US-Venezuela relations is unlikely, said Luis Peche Arteaga of Caracas-based consultancy Sala 58, adding that “it mainly looks like a confrontational approach.”
Jose Cardenas, a former adviser on Latin American policy under Bush, said that top of the list for the Trump administration would be “oil sanctions and overhauling oil permits that allow U.S. and foreign oil companies to do business.” with Maduro.”
Since 2022, Biden has issued licenses to some foreign partners and customers of Venezuelan state oil company PDVSA, including Chevron, Repsol, Eni and Reliance Industries, allowing oil supplies to the US, Europe and India.
That helped Venezuelan oil exports rise to 950,000 barrels per day last month, the highest level in four years, despite the Biden administration introducing broad restrictions on Caracas this year over the lack of guarantees for fair elections in Venezuela .
“Revoking the oil permits would not only send a strong signal to Maduro, the opposition, the EU and others that the US is serious about a democratic transition taking place in Venezuela,” said Cardenas, now a strategic advisor and lobbyist in Washington.
Here too, there will be limits to Rubio. Analysts have warned that tougher sanctions could push Venezuela, which already has strategic alliances including with Iran to allocate its oil, to boycott Trump’s goal of repatriating thousands of illegal migrants.
(Reporting by Timothy Gardner; Additional reporting by Matt Spetalnick in Washington, Vivian Sequera in Caracas and Marianna Parraga in Houston; Editing by Michelle Nichols and Marguerita Choy)
