Venezuela's crude oil exports face "physical cutoff" by the U.S. military: Onshore storage capacity only remains for 5 days, with a risk of shutting down a production capacity of one million barrels per day

According to Xinhua News Agency, U.S. President Trump stated on social media on the 16th that he recognizes the current government of Venezuela as a "foreign terrorist organization." On the same day, he ordered a "comprehensive and thorough blockade" of all sanctioned oil tankers entering and leaving Venezuela. As U.S. sanctions against Venezuela escalate from economic measures to "physical severance," the government of Nicolás Maduro is facing an unprecedented survival crisis, with the country's oil industry on the brink of paralysis. According to reports on the 18th, to execute this order, the U.S. military has deployed what is said to be the largest fleet in South American history in the Caribbean and last week conducted a raid to seize a tanker carrying approximately $100 million worth of crude oil. This military pressure has caused many tankers heading to Venezuela to turn back midway, and ships waiting to depart have also been forced to delay their journeys. It is estimated that up to a quarter of the U.S. Navy's active forces are currently gathered in the Caribbean. The U.S. military has not only destroyed more than 20 speedboats accused of drug smuggling but also frequently deployed bombers and fighter jets near the Venezuelan coastline, creating a high-pressure situation for the Maduro government. Although the state-owned oil company of Venezuela (PDVSA) insists that exports are "normal," the country's crude oil logistics chain is nearly broken. Reports citing internal sources indicate that due to export blockages, onshore crude oil storage space is down to about 5 days' worth. This blockade not only cuts off the country's financial lifeline but also forces its production capacity of one million barrels per day to face the risk of being shut down due to overflowing inventory and a shortage of diluents. WTI crude oil has sharply dropped, currently reported around $56. Maritime blockade seen as "act of war" This action by the Trump administration marks a fundamental shift in strategy towards Venezuela. Trump's chief of staff, Susie Wiles, stated in a media interview that the president intends to continue striking vessels until Maduro "surrenders," which is widely interpreted as the real goal of the U.S. is regime change. Former U.S. official and sanctions expert Edward Fishman pointed out that implementing a naval blockade and intercepting most or even all Venezuelan oil shipments has the nature of an "act of war." He believes that such blockades are typically a prelude to war, rather than merely a tool of national policy. The U.S. House of Representatives narrowly voted down two resolutions attempting to limit Trump's military actions in the Caribbean on Wednesday, clearing some domestic political obstacles for the continuation of the blockade. Daniel Lansberg-Rodríguez, an advisor at Aurora Macro Strategies, commented that the Trump administration has put the Maduro government in an unprecedented state of imbalance, stating, "Maduro is sitting on a pile of wet gunpowder, and the U.S. is increasing the amount of gunpowder, but whether this will ignite remains to be seen." Inventory Crisis and Supply Disruption of Diluent PDVSA is facing a logistical bottleneck that has reached a critical point. An insider revealed to the media: “Our onshore storage capacity is down to about 5 days, and at best, depending on the operational capacity of our fleet, offshore storage can last for another 7 days.” If exports are completely blocked, Venezuela's crude oil production will be difficult to sustain. Guillermo Arcay, a researcher at the Harvard Growth Lab, pointed out that in addition to the depletion of storage space, PDVSA is also facing a lack of imported petrochemical products, which are crucial for diluting the country's heavy crude oil. According to data from trade intelligence firm Kpler, a tanker carrying Russian naphtha (a type of diluent) turned back last week, despite two other vessels having successfully docked earlier. Market Volatility and Risks of the "Dark Fleet" Affected by rising expectations of regime change, Venezuelan bond prices have surged, investors are beginning to reprice the likelihood of the Maduro government’s downfall. However, not all oil flows have stopped. Chevron's operations in Venezuela account for about a quarter of the country's daily oil production of 1 million barrels, and the company stated that its operations currently comply with U.S. laws and sanctions, continuing to produce and sell oil. Additionally, the "dark fleet," operated with assistance from Russia and Iran, is still attempting to operate. According to Samir Madani, CEO of TankerTrackers.com, about 60% of such vessels have not yet been included on the U.S. Treasury's sanctions list. Nevertheless, as the U.S. Navy strengthens its interception efforts in the Indian Ocean and Atlantic, more and more tankers are choosing to turn back. Although vessels not on the list are temporarily relatively safe, the overall transportation risk is increasing significantly. Economic Stagnation and Pressure on Regime Survival Christopher Sabatini, a Latin America expert at Chatham House in London, believes that Trump's oil blockade is a "game changer" for the Maduro government, putting it at risk of complete bankruptcy. Sabatini pointed out that it is difficult to see how Maduro can fill the huge revenue gap through illegal gold mining, drug trafficking, and money laundering. Currently, the domestic economic situation in Venezuela is extremely deteriorating. The currency bolívar is depreciating rapidly, and there is a severe shortage of U.S. dollars, with economists predicting that inflation will exceed 500% this year. Although Cuba has endured sanctions for 60 years, Venezuela's population is three times that of Cuba, and the elite class of its dependent system has become accustomed to a high standard of living, which puts the regime's resilience to the test. Nevertheless, considering that the "Bolívar Revolution" has lasted for a quarter of a century, and that allies like Russia and Iran, although limited in support, still exist, very few are willing to bet that the Venezuelan regime will collapse without direct U.S. military intervention. As expert Fishman stated, there are very few historical cases of regime change achieved through non-violent economic pressure, “but when the U.S. seeks to use military force to change regimes, whether in Afghanistan or Iraq, they have succeeded ”