Context

The article explains U.S. naval moves against Venezuela following actions against oil tankers linked to the country after U.S. President Donald Trump announced a “total and complete blockade” of all oil tankers going into and out of Venezuela. The focus is on how the United States enforces sanctions using naval action, financial systems, insurance rules, and shipping regulations.

Merchant Ships Targeted by the U.S.

0.1 In the week of December 8, the U.S. seized the oil tanker Skipper near Venezuela while it was carrying nearly two million barrels of crude oil.
0.2 The U.S. stated that Skipper was supplying oil to Cuba at subsidised rates, indirectly supporting the government of Venezuelan President Nicolás Maduro.
0.3 The U.S. Coast Guard also stopped and boarded Centuries, a Panamanian-flagged tanker carrying Venezuelan oil, after a Venezuelan Navy escort took it up to Venezuela’s Exclusive Economic Zone (EEZ) limit.
0.4 On the same day, the Coast Guard attempted to intercept Bella 1, a tanker heading to Venezuela to load crude oil, which had earlier been sanctioned by the U.S. for trading Iranian oil.

What Are U.S. Sanctions?

0.1 United Nations sanctions are global, binding, and legally enforceable, whereas U.S. sanctions are unilateral and based on American foreign policy decisions.
0.2 The article notes that physical enforcement such as naval blockades is expensive and often ineffective, based on past global experience.
0.3 Since the Second Gulf War, the U.S. has increasingly relied on financial sanctions by leveraging its influence over the global economy.

How the U.S. Uses the Global Financial System

0.1 The U.S. controls the world’s most important currency, the US dollar, which dominates global financial transactions and oil trade.
0.2 American companies are legally barred from dealing with sanctioned countries, and foreign banks comply to avoid losing access to the U.S. financial system.
0.3 The article cites cases such as BNP Paribas being fined $9 billion (2014) and pressure on Banco Delta Asia to demonstrate enforcement mechanisms.
0.4 Even transactions not directly involving the U.S. often pass through American-linked financial institutions, enabling monitoring and blocking.

Shipping, Insurance, and Classification Controls

0.1 Shipping is global, but marine insurance is largely controlled by Western countries, making it a powerful sanctions tool.
0.2 Ships require insurance and safety certification from classification societies to operate legally and access international ports.
0.3 Most major classification societies belong to the International Association of Classification Societies (IACS).
0.4 Once sanctions are imposed, insurers and classification societies withdraw cover, making commercial operations risky or unviable.

Role of the Office of Foreign Assets Control (OFAC)

0.1 OFAC, under the U.S. Treasury, identifies individuals, companies, and vessels involved in activities against U.S. foreign policy interests.
0.2 In June 2024, OFAC sanctioned Bella 1 for allegedly carrying cargo linked to a Hezbollah-owned company.
0.3 OFAC regularly updates sanction lists used by banks, insurers, and shipping firms to ensure compliance.

Earlier U.S. Sanctions and Their Impact on India

0.1 U.S. sanctions on Iran compelled India to reduce and eventually halt crude oil imports, affecting energy diversification.
0.2 India received a temporary waiver to continue work at Chabahar Port, reflecting selective exemptions based on strategic interests.
0.3 The CAATSA law created uncertainty over India’s purchase of the Russian S-400 missile system, impacting defence cooperation.
0.4 Sanctions on Russia influenced payment mechanisms for Indian oil imports, pushing India to explore alternatives to the dollar system.