The Situation Room - December 17th

Good morning everyone,

I’m Atlas, and welcome to The Situation Room! We cover the most high impact geopolitical developments every Wednesday!

Today’s topics:

• Trump Orders Blockade Of All Venezuelan Oil Tankers, Labels Country A Foreign Terrorist Organization

• M23 Rebels To Withdraw From Seized Congo Town

• U.S. Labels Colombia’s ‘Clan Del Golfo’ As Terrorist Organization

Trump Orders Blockade Of All Venezuelan Oil Tankers, Labels Country A Foreign Terrorist Organization

_{By: Atlas}

President Donald Trump announced Tuesday that he is ordering a "total and complete blockade" of all sanctioned oil tankers heading to and from Venezuela, while designating the government of Venezuelan President Nicolás Maduro as a foreign terrorist organization.

"For the theft of our Assets, and many other reasons, including Terrorism, Drug Smuggling, and Human Trafficking, the Venezuelan Regime has been designated a FOREIGN TERRORIST ORGANIZATION," Trump wrote on Truth Social. "Therefore, today, I am ordering A TOTAL AND COMPLETE BLOCKADE OF ALL SANCTIONED OIL TANKERS going into, and out of, Venezuela."

Trump demanded that Venezuela return "all of the Oil, Land, and other Assets that they previously stole from us," though he did not specify what assets he was referencing. Venezuelan leader Hugo Chávez nationalized oil fields and seized stakes from foreign companies including ExxonMobil during his tenure, which ended with his death in 2013.

The announcement marks the most aggressive action Trump has taken to pressure Maduro since taking office, coming one week after U.S. forces seized the Skipper, a sanctioned oil tanker carrying nearly 2 million barrels of Venezuelan crude, in international waters near the country's coast.

Military buildup in the Caribbean

Trump boasted that "Venezuela is completely surrounded by the largest Armada ever assembled in the History of South America."

"It will only get bigger, and the shock to them will be like nothing they have ever seen before," he wrote.

The U.S. Navy currently has 11 ships in the region, including the aircraft carrier USS Gerald R. Ford and several amphibious assault ships. Those vessels carry helicopters, V-22 Ospreys and other aircraft. The Navy has also been operating P-8 Poseidon maritime patrol aircraft in the area.

Since September, the U.S. military has conducted more than 20 strikes against alleged drug-trafficking vessels in the Caribbean Sea and eastern Pacific Ocean. At least 95 people have been killed in 25 known strikes, according to the Associated Press.

White House Chief of Staff Susie Wiles said in a Vanity Fair interview published Tuesday that Trump "wants to keep on blowing boats up until Maduro cries uncle."

Trump said Friday that the campaign could soon expand beyond maritime operations.

"Now we're starting by land, and by land is a lot easier, and that's going to start happening," he told reporters at the White House. "It's not only land strikes on Venezuela, it's land strikes on horrible people that are bringing in drugs and killing our people."

Venezuela denounces 'grotesque' threat

The Venezuelan government released a statement Tuesday accusing Trump of "violating international law, free trade, and the principle of free navigation" with what it called "a reckless and grave threat."

"On his social media, he assumes that Venezuela's oil, land, and mineral wealth are his property," the statement said. "Consequently, he demands that Venezuela immediately hand over all its riches. The President of the United States intends to impose, in an utterly irrational manner, a supposed naval blockade on Venezuela with the aim of stealing the wealth that belongs to our nation."

Maduro's government said it plans to denounce the situation before the United Nations.

Hours before Trump's announcement Tuesday evening, Maduro praised Venezuela on state television for having "proven to be a strong country" against U.S. pressure.

"Venezuela has 25 weeks denouncing, confronting and defeating a campaign of multidimensional aggression, ranging from psychological terrorism to the piracy of the corsairs who assaulted the oil tanker," he said.

Questions over terrorist designation

The foreign terrorist organization designation has historically been reserved for non-state actors that do not have sovereign immunities conferred by treaties or United Nations membership. Governments that U.S. administrations seek to sanction for financing or tolerating extremist violence are typically designated "state sponsors of terrorism."

Venezuela is not currently on the state sponsors of terrorism list.

According to the U.S. State Department, designating an entity as a foreign terrorist organization makes it illegal for any U.S. citizen to knowingly provide "material support or resources" to such an organization.

In rare cases, the U.S. has designated an element of a foreign government as an FTO. The Trump administration did so with the Iranian Revolutionary Guard Corps during its first term, though Iran had already been designated a state sponsor of terrorism.

In November, the Trump administration designated the Cartel de los Soles as a foreign terrorist organization. The term originally referred to Venezuelan military officers involved in drug-running, though it is not a cartel per se.

Maduro was indicted in the U.S. in 2020 as a "narco-terrorist" for his alleged involvement in trafficking cocaine.

Oil market impact

Venezuela possesses the world's largest proven oil reserves and produces approximately 1 million barrels per day. However, the country has been largely cut off from global markets due to U.S. sanctions imposed since 2017.

Francisco Monaldi, a Venezuelan oil expert at Rice University in Houston, told the Associated Press that about 850,000 barrels of the 1 million daily production is exported. Of that total, roughly 80 percent goes to China, 15 to 17 percent goes to the U.S. through Chevron Corp., and the remainder goes to Cuba.

The state-owned oil company Petróleos de Venezuela S.A., known as PDVSA, sells most of its exports at a steep discount in the black market in China.

Andy Lipow, president of Lipow Oil Associates, told CNBC that a full embargo of Venezuelan oil would affect 800,000 to 900,000 barrels per day, which could increase prices by approximately $2 to $3 per barrel.

Bob McNally, president at Rapidan Energy Group, said "nothing substantively has changed" as long as only sanctioned tankers are targeted.

"We estimate that sanctioned (only) tankers would threaten about 0.3 million barrels of Venezuela's roughly 0.9 million barrels a day of total crude exports," McNally said.

As many as 18 sanctioned oil-laden ships are currently in Venezuelan waters, according to Samir Madani, co-founder of the firm Tanker Trackers. Eight are classified as very large cargo container ships.

"It's quite a buffet for the U.S. to choose from," Madani told Axios.

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