Yesterday, in a shot across the bow at the Venezuelan government the U.S. State Department sanctioned seven foreign companies that it deemed in direct violation of international agreements over Iran. Among those listed is Venezuela’s state-owned oil company, Petroleos de Venezuela, S.A. (PDVSA).  “By imposing these sanctions, we’re sending a clear message to companies around the world:  Those who continue to irresponsibly support Iran’s energy sector or help facilitate Iran’s efforts to evade U.S. sanctions will face significant consequences,” Deputy Secretary of State James Steinberg explained in the announcement.

The sanctions prohibit PDVSA from gaining access to financing from U.S. financial institutions and make U.S. government contracts inaccessible. Notably, however, it does not impact Venezuelan oil exports to the U.S. and exempts PDVSA subsidiaries, mainly CITGO, from any sanctions. Steinberg said the Obama administration had carefully considered any affect on oil markets before making the decision.  U.S. Rep. Connie Mack, a Florida Republican who has been pushing for sanctions against the South American country, said he thinks they are “not going to have an immediate, drastic effect” on Venezuela’s petroleum industry or weaken Chávez’s government. [But it’s] a step in the right direction,” he added.  U.S. Senator Richard Lugar (R-IN), ranking member of the Senate Foreign Affairs Committee,  welcomed the announcement saying “that the Venezuelan government is not likely to back away from these relationships [with Iran] without more explicit international exposure and action.”

The reaction from Venezuela was predictable. Its Foreign Minister Nicolas Maduro warned that given these measures he could not guarantee regular shipments to the U.S., and that the Chávez government was currently evaluating proposals in response. These are likely empty threats that the Chávez government will not follow through on given the significant revenues it receives from its oil sales to America.  Shipments from Venezuela currently account for about 10 percent of all oil imports to the U.S. and 40% of the South American country’s oil exports.

These are the first sanctions imposed by the United States for refined petroleum products under the Iran Sanctions Act since it was amended last year.  According to reports, PDVSA has delivered at least two cargoes of refined petroleum products to Iran between December 2010 and March 2011, worth approximately $50 million.