Trump Labels Venezuelan Government a Foreign Terrorist Organization, Orders Blockade on Sanctioned Oil Tankers

U.S. President Donald Trump on Tuesday designated the government of Venezuela as a “Foreign Terrorist Organization” and directed the U.S. military to enforce what he called a “total and complete” blockade of all oil tankers already under American sanctions entering or leaving Venezuelan waters.

Announcing the decision on his Truth Social platform, Trump wrote that Venezuela is “completely surrounded by the largest armada ever assembled in the history of South America.” He cited alleged asset theft, terrorism, drug smuggling and human trafficking as the principal reasons for the new designation and for the maritime interdiction order. “It will only get bigger, and the shock to them will be like nothing they have ever seen before,” he added in the post.

The Venezuelan government quickly condemned the action, describing it as “grotesque” and “absolutely irrational.” Caracas argued that the move violates international law, free trade and the principle of free navigation, calling it a serious threat against a sovereign nation.

The U.S. State Department’s classification places Venezuela alongside groups already identified as terrorist entities. Under federal law, an organization on the list is subject to asset freezes in the United States, and American citizens are barred from providing it with “material support or resources.” Violations can lead to criminal penalties.

Energy analysts said the immediate market impact would hinge on how strictly the blockade is applied and whether third-country buyers comply. Andy Lipow, president of Lipow Oil Associates, estimated that a full embargo on Venezuelan crude would affect between 800,000 and 900,000 barrels per day, potentially lifting global oil prices by roughly $2 to $3 a barrel. With a current worldwide surplus of about 2 million barrels per day, he said the global system would remain “well supplied” under most scenarios.

Lipow also pointed to China’s role, noting that Beijing is Venezuela’s largest customer and benefits from steeply discounted crude. If Chinese firms ignore U.S. restrictions, he said, significant volumes could continue to reach the market despite the blockade.

Bob McNally, president of Rapidan Energy Group, offered a similar assessment. He calculated that targeting only tankers already under U.S. sanctions would threaten approximately 300,000 barrels of Venezuela’s roughly 900,000-barrel-a-day export stream. According to McNally, that level is not sufficient to produce a lasting spike in prices, particularly as inventories are building globally.

Oil benchmarks rose modestly after the announcement. Brent crude added 0.9% to $59.46 a barrel, while U.S. West Texas Intermediate gained 1% to $55.82. Hours earlier, both grades had touched four-year lows, with WTI sliding to $55.27 and Brent settling at $58.92.

The designation and blockade order mark the latest escalation in Washington’s campaign against Venezuelan President Nicolás Maduro. In recent months the White House has repeatedly stated that Maduro’s “days are numbered” and has not ruled out the possibility of direct military intervention. Reports of a substantial U.S. naval buildup in the Caribbean include the deployment of an aircraft carrier and strikes on vessels the administration says were trafficking narcotics to the United States.

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No timetable has been given for how long the blockade will remain in effect, nor have U.S. officials detailed rules of engagement for intercepting vessels flagged to third countries but previously sanctioned. Maritime insurers and global shippers are monitoring the situation closely, with industry sources saying additional compliance checks are already delaying cargoes in the region.

In Caracas, government media outlets broadcast statements accusing Washington of attempting to provoke an economic collapse and undermine the country’s sovereignty. Venezuelan officials did not specify whether they intend to escort oil tankers with naval vessels or seek relief through international bodies.

Separately, opposition leaders inside Venezuela urged foreign governments to maintain humanitarian corridors for food and medical supplies, emphasizing that the blockade targets sanctioned oil shipments rather than general commerce. U.S. officials have not announced new restrictions on non-oil goods, though humanitarian exemptions in previous sanctions packages require special licensing.

As markets assess the scope of the blockade, shipping data indicate that several vessels identified by the U.S. Treasury’s Office of Foreign Assets Control remain anchored off Venezuelan ports. Industry trackers said it was unclear whether those ships would attempt to depart before U.S. naval patrols expand.

While the administration contends that labeling Venezuela a terrorist regime will accelerate political change, analysts caution that enforcement challenges and the involvement of non-U.S. actors could blunt its effectiveness. For now, traders, diplomats and regional governments are watching to see whether additional vessels or economic sectors are swept into the widening sanctions net.

Crédito da imagem: Evelyn Hockstein / Reuters