Sanctions and Oil Production

Evidence from Venezuela's Orinoco Basin




economic sanctions, Venezuela, Oil production


We use the differential access to credit of oil firms in Venezuela’s Orinoco Basin to identify the economic effects of financial and oil sanctions on firm output. Using a panel of monthly firm-level oil production from 2008-2020, we provide difference-in-differences estimates showing that financial and oil sanctions led to large oil production losses among firms that had access to international credit prior to sanctions. The estimated effects explain around half of the output drop experienced in those firms since the adoption of sanctions, for a total loss of around USD 6.2bn a year at current oil prices. We also argue that by impeding the government from extending special financing arrangements to other firms in the area, sanctions precluded the adoption of policy decisions that could have stabilized production at pre-sanctions levels.


Afesorgbor, S., Mahadevan, R., 2016. The Impact of Economic Sanctions on Income Inequality of Target States. World Development 85, 1-11.

Ahn, D., Ludema, R., 2020. The sword and the shield: The economics of targeted sanctions. European Economic Review 130.

Aizhu, C., Parraga, M., 2019. China CNPC suspends Venezuelan oil loading, worried about U.S. sanctions: sources. Reuters. Retrieved from:

Angrist, J., Pischke, J., 2009. Mostly Harmless Econometrics: An Empiricist's Companion. Princeton University Press: New Jersey.

Argus Media, 2019. Scant imports leave Venezuela bereft of motor fuel. Retrieved from:

Armas, M., 2019. UPDATE 1-Venezuela's Maduro seeks to revive stalled debt talks, bondholders unimpressed, Reuters. Retrieved from:

Armas, M., 2020. Gobierno de Venezuela anuncia oferta condicionada a tenedores de bonos, Reuters. Retrieved from:

Bahar, D., Bustos, S., Morales, J. R., Santos, M. A., 2019. Impact of the 2017 sanctions on Venezuela: Revisiting the evidence. Brookings Institution. Retrieved from:

Balakrishnan, S., Koza, M., 1993. Information asymmetry, adverse selection and joint-ventures: Theory and evidence, Journal of Economic Behavior and Organization 20, 99-117,

BBC News, 2014. Rosneft boss Igor Sechin defiant over US sanctions. Retrieved from:

Bernanke, B., Gertler, M., 1989. Agency Costs, Net Worth, and Business Fluctuations, Bernake and Gertler: Business Fluctuations, The American Economic Review 79, 14-31.

Biglaiser, G., Lektzian, D., 2020. The effects of economic sanctions on targeted countries’ stock markets. International Interactions 46, 526-550.

Bilinski, A., L. Hatfield, 2019. Nothing to see here? Non-inferiority approaches to parallel trends and other model assumptions. Reproduced, Harvard University: Boston.

Bloomberg, 2019. India warning smaller cos to stop taking Venezuelan oil: Kutty. Bloomberg Terminal.

Bull, B., Rosales, A., 2020. Into the shadows: sanctions, rentierism, and economic informalization in Venezuela, European Review of Latin American and Caribbean Studies 109, 107-133.

C-SPAN, 2019. Bolton announces U.S. sanctions on Venezuela's state-owned oil company. McClatchy DC Buraeu. Retrieved from:

Chakraborty, D., Kassai, L, 2019. India's Reliance Caps Venezuelan Oil Buying on U.S. Pressure, Bloomberg. Retrieved from:

Cohen, D., Weinberg, Z., 2019. Sanctions Can’t Spark Regime Change. Foreign Affairs. Retrieved from:

Cohen, L., Parraga, M., 2020. Special Report: How China got shipments of Venezuelan oil despite U.S. sanctions. Reuters. Retrieved from:

De Alba, M., 2019. ¿Qué son las sanciones secundarias?, Prodavinci. Retrieved from:

Delcy Rodríguez (@drodriven2) September 15, 2020, 11:00am, Tweet. Available at:

DeYoung, K., Mufson, S., Faiola, A., 2019. Trump administration announces sanctions targeting Venezuela’s oil industry. The Washington Post. Retrieved from:

Equipo Anova, 2021. Impacto de las Sanciones Financieras Internacionales contra Venezuela: Nueva evidencia. Anova policy research 3.

Federal Register, 2015. Executive Order 13692, Retrieved from:

Federal Register, 2017. Executive Order 13808, Retrieved from:

Federal Register, 2019. Executive Order 13884, Retrieved from:

FinCEN, 2017. FinCEN Warns Financial Institutions to Guard Against Corrupt Venezuelan Money Flowing to U.S. Retrieved from:

FinCEN, 2019. Updated FinCEN Advisory Warns Against Continued Corrupt Venezuelan Attempts to Steal, Hide, or Launder Money. Retrieved from:

Gordon, M., Gupte, E., Bambino, J., 2019. Analysis: Dueling US oil sanctions give India unexpected leverage, S&P Global Platts. Retrieved from:

Hausmann, R., Muci, F., 2019. Don’t Blame Washington for Venezuela’s Oil Woes: A Rebuttal. Americas Quarterly. Retrieved from:

Hausmann, R., Rigobon, R., 2002. An alternative interpretation of the ‘resource curse’: Theory and policy implications. Nber Working Paper Series 9424.

Hausmann, R. and Rodriguez, F., 2012. Why did Venezuelan growth collapse?. Venezuela: Anatomy of a Collapse.

Hufbauer, G., Schott, J., Elliott, K., 1990. Economic Sanctions Reconsidered: History and Current Policy. Peterson Institute for International Economics, Washington D.C.

Human Rights Council, 2020. Report of the independent international fact-finding mission on the Bolivarian Republic of Venezuela, A/HRC/45/33, Agenda item 4, Human Rights Council 45th session, September 15. Retrieved from:

Imperiale, J., 2020. Sanctions by the Numbers, U.S. Sanctions Designations and Delistings, 2009–2019, February 27. Retrieved from:

Jiménez, et al. v Palacios, et al, 2019. Opinion, Court of Chancery of the State of Delaware. case no. 2019-0490-KSJM, August 12.

Jiménez, et al. v Palacios, et al, 2020. Order, Supreme Court of the State of Delaware, case no. 2019-0490, July 22.

Kavakli, Chatagnier, Hatipoglu, 2019. The Power to Hurt and the Effectiveness of International Sanctions. The Journal of Politics 82, 879-894.

Kamepfer, W., Lowenberg, A., 2007. The Political Economy of Economic Sanctions. Handbook of Defense Economics 2, 867-911.

Kassai, L, 2020. U.S. Slaps Sanctions on Mexican Companies Helping Venezuelan Oil. Bloomberg. Retrieved from:

Kirtland, M., 2015. Bancec applied. Norton Rose Fulbright. Retrieved from:

Kurmanaev, A., Jakes, L., 2019. With Tougher U.S. Sanctions on Venezuela, Bolton Says ‘Now is the Time for Action’. The New York Times. Retrieved from:

Morales, J. R., 2019. Sanciones: ¿causa o consecuencia de la crisis?. Prodavinci. Retrieved from:

Lawler, D., 2020. U.S. targets Russian oil giant in escalating campaign vs. Venezuela. Axios, Retrieved from:

Laya, P., Yapur, N., 2020. Venezuela Reaches Out to Bondholders After Months of Silence. Bloomberg. Retrieved from:

Ministerio del Poder Popular de Petróleo, 2019. Ascienden reservas probadas de petróleo y gas de Venezuela. Gobierno Bolivariano de Venezuela. Retrieved from:

Mohsin, S., Millard, P., 2020. U.S. Sanctions Second Rosneft Subsidiary for Backing Maduro. Bloomberg. Retrieved from:

Neuenkirch, M., Neumeier, F., 2015. The Impact of UN and US Economic Sanctions on GDP Growth. FIW Working Paper 138, FIW - Research Centre International Economics.

Oechslin, M., 2014. Targeting autocrats: Economic sanctions and regime change. European Journal of Political Economy 36, 24-40.

Oliveros, L., 2020. Impacto de las sanciones financieras y petroleras sobre la economía venezolana. WOLA. Retrieved from:

OFAC (2020) GENERAL LICENSE NO. 8F Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities. Venezuela Sanctions Regulations 31 C.F.R. Part 591, April 21.

Peksen, D., Drury, A., 2010. Coercive or Corrosive: The Negative Impact of Economic Sanctions on Democracy. International Interactions 36, 240-264.

Reuters, 2019. U.S. court allows Venezuela's Guaido to argue in Crystallex case. Retrieved from:

Rodríguez, J., 2005. La apertura petrolera en Venezuela (1992-1999). Universidad de Los Andes, Facultad de Humanidades y Educación, Escuela de Historia.

Rodríguez, F., 2018. Crude Realities: Understanding Venezuela’s Economic Collapse. WOLA. Retrieved from:

Rodríguez, F., 2019. Sanctions and the Venezuelan Economy: what the data say, Latam Economics Viewpoint, Torino Economics.

Rodríguez, F., Sachs, J., 1999. Why Do Resource-Abundant Economies Grow More Slowly?. Journal of Economic Growth 4, 277–303.

Shagabutdinova, E., Berejikian, J., 2007. Deploying Sanctions while Protecting Human Rights: Are Humanitarian “Smart†Sanctions Effective? Journal of Human Rights 6, 59-74.

Smith, J., 1987. Trade Credit and Informational Asymmetry, The journal of finance 42, 863-872.

Spetalnick, M, 2017. U.S. considering some sanctions on Venezuela oil sector: sources. Reuters, Retrieved from:

U.S. Department of the Treasury, 2014. Announcement of Treasury Sanctions on Entities Within the Financial Services and Energy Sectors of Russia, Against Arms or Related Materiel Entities, and those Undermining Ukraine's Sovereignty. Retrieved from:

United Nations, 2019. Negative impact of unilateral coercive measures on the enjoyment of human rights, General Assembly, Human Rights Council, Forty-second session, July 5

Von Soest, C., Wahman, M., 2014. The Underestimated Effect of Democratic Sanctions, Weatherhead Center for International Affairs, Harvard University.

Wadhams, N., Laya, P., 2019. U.S. Asserts Guaido's Control Over Key Venezuela Bank Accounts, Bloomberg. Retrieved from:

Weisbrot, M., Sachs, J., 2019. Economic Sanctions as Collective Punishment: The Case of Venezuela. Center For Economic and Policy Research.

Wong, E., 2019. Venezuela Opposition Leader Guaidó Controls U.S. Bank Accounts, State Dept. Says. The New York Times. Retrieved from:

Wolfers, J., 2006. Did unilateral divorce laws raise divorce rates? A reconciliation and new results. The American Economic Review 96, 1802-1820.