Editor’s note: This is a developing story. Check back for further updates and analysis.
The Trump administration ratcheted up pressure on Venezuela's President Nicolas Maduro on Jan. 23, announcing U.S. recognition of the country's opposition leader as interim president and signaling potential new sanctions against its vital oil sector.
With street protests against Maduro underway across Venezuela, Trump said the United States recognized Juan Guaido, head of the opposition-controlled Congress, as the country's leader and called socialist President Nicolas Maduro's government "illegitimate."
"I will continue to use the full weight of United States economic and diplomatic power to press for the restoration of Venezuelan democracy," Trump said in a statement.
The administration waited to issue its announcement until after Guaido declared himself the country's temporary president, and just hours later Maduro said he was breaking relations with the United States and giving U.S. diplomatic personnel 72 hours to leave Venezuela. Contacts have already been severely limited in recent years.
U.S. Secretary of State Mike Pompeo called on Maduro to step aside and urged the country's military to support efforts to restore democracy.
A senior U.S. official, speaking on condition of anonymity, warned Maduro and his loyalists that Washington was ready to ramp up oil, gold and other sanctions and take unspecified actions "if they choose to harm any of the national assembly members or any of the other duly legitimate officials of the government of Venezuela."
Asked whether he was considering U.S. military intervention in Venezuela, Trump later told reporters: "We're not considering anything, but all options are on the table."
Venezuelan opposition sympathizers had been urging Guaido to assume the presidency since Maduro was inaugurated for a second term on Jan. 10 following a widely boycotted election last year that the United States and many other foreign governments characterized as fraudulent.
Guaido, 35, has energized the opposition with a campaign to declare Maduro a usurper and has promised a transition to a new government in a nation suffering a hyperinflationary economic collapse.
Guaido, a newcomer on the national scene who was elected to head Congress on Jan. 5, had said earlier he was willing to replace Maduro if he had the military's support, with the aim of then calling for free elections.
Formal U.S recognition of Guaido could be complicated, however, by questions of how to deal with Venezuela's U.S.-based diplomats and who would now control its bank accounts and other U.S. assets. It was also unknown whether Guaido would now try to exert control over Citgo, the U.S. refining arm of Venezuela's state-run oil company PDVSA.
The senior administration official told reporters that Washington now regards Guaido and the National Assembly as the "legitimate decision-makers" in transactions between the United States and Venezuela and that there would be a "whole bunch of consequences" but declined to elaborate.
U.S. recognition of Guaido could also backfire if Maduro used it as a pretext to take action such as detaining him or other opposition figures.
After Trump's announcement, Argentina, Chile, Peru and Paraguay made similar moves, and a Canadian official said Ottawa would also follow suit. But Mexico said it did not foresee a change in policy on Venezuela.
Adding to pressure on Maduro, multiple sources said the Trump administration could impose new U.S. sanctions on Venezuela's oil industry as soon as this week if the political situation there deteriorates further.
U.S. officials are considering a range of potential measures, including restricting U.S. imports of Venezuelan oil or even a full ban, to punish Maduro's government, but no final decisions have been made, two people familiar with the matter told Reuters.
Two other sources briefed on the matter said the U.S. administration had privately informed U.S. energy companies of its deliberations.
The decision on whether to go ahead could depend on how harshly Maduro cracks down on protesters and how he responds to Guaido's swearing-in, several of the sources said.
Even then, the administration would likely hold further in-depth discussions that could delay any final decision, one of the people familiar with the matter said.
Since late last year, the White House has also been considering whether to put Venezuela on the U.S. list of state sponsors of terrorism, U.S. officials have said.
The White House has been growing frustrated with existing sanctions on Venezuela which have so far spared oil exports. Cutting off Venezuela’s exports would choke off most revenue to the OPEC member nation.
The United States has held off on broad, oil-related measures, mindful of the potential not only for deepening the hardships of the Venezuelan people but also the risk of causing problems for U.S. companies and consumers.
U.S. refiners such as Valero Energy Corp., Chevron Corp. and PBF Energy Inc. have had discussions about the possibility of such sanctions with the Trump administration in recent weeks, and companies have already started bidding up prices for alternative types of crude to replace the Venezuelan grades.
The sources said it was unclear whether a crude ban, if initiated, would be phased in or immediate, or whether it would also seek to cut off Venezuela’s ability to sell oil to other international buyers.
Venezuelan crude exports to the United States last year fell 15% to the lowest annual average in nearly three decades, according to Refinitiv Eikon data.
Still, some U.S. refineries have equipment specifically designed for heavy grades of crude like those from Venezuela. They imported about 500,000 barrels per day last year, according to the U.S. Energy Information Administration.