CARACAS/HOUSTON (Reuters) - U.S. sanctions on the finance boss of Venezuela’s oil company PDVSA have led to some exports to the United States being blocked as banks and investment funds refuse to provide letters of credit to potential buyers, three financial sources said.

Simon Zerpa (R), vice president for finance at Venezuela's state-owned oil company PDVSA, holds a replica of the sword of national hero Simon Bolivar next to Venezuela's President Nicolas Maduro (C) during a ceremony in Caracas, Venezuela July 26, 2017. Picture taken July 26, 2017. Miraflores Palace/Handout via REUTERS

U.S. businesses are barred from dealing with a sanctioned person or company and one of the sources said the sanctions on PDVSA’s Finance Vice President Simon Zerpa were deterring some businesses from investments with the company as so many of its transactions are linked to the finance department he leads.

A Venezuelan oil shipment to the United States was blocked this month as lenders refused to provide letters of credit to PDVSA customers, the sources said.

Letters of credit, issued by banks, guarantee to a seller that a buyer will pay a specified amount on time when a shipment is accepted. Without a letter of credit, shipments cannot be delivered and the shipper does not get paid. Blocking letters of credit for PDVSA oil chokes off cash that is desperately needed in the OPEC nation.

Petróleos de Venezuela, S.A., commonly known as PDVSA, is the financial motor of President Nicolas Maduro’s leftist government, and it is operating within one of the deepest economic recessions Venezuela has ever experienced and widespread political unrest.

In one instance, U.S. refiner PBF Energy PBF.N was unable to get a letter of credit for a Venezuelan crude cargo to be received at a U.S. port.

The Suezmax tanker Karvounis has been anchored in the U.S. Gulf for more than a month. It partially discharged its cargo on Aug. 23 in New Orleans, according to Thomson Reuters vessel tracking data. A trader close to the deal said PBF Energy ultimately agreed to a prepayment, removing the need for a credit letter. It was unclear what would happen with the rest of the cargo.

Some U.S. customers can import without a letter of credit if they pay up front.

In July, the United States imposed sanctions on 13 senior Venezuelan officials, including the head of Venezuela’s army, the national police chief, the director of elections, and Zerpa.

At the time, a U.S. official warned that the administration of U.S. President Donald Trump was readying tougher measures that could be part of a “steady drumbeat” of responses to the Venezuelan crisis.

The most serious potential future step would be financial sanctions that would halt dollar payments for the country’s oil, starving the government of hard currency, or a total ban on oil imports to the United States, Venezuela’s biggest customer.

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This month the United States imposed its first economic sanctions on Venezuela, banning debt trades for government-issued bonds and bonds issued by PDVSA.

The problem could spread to more cargoes if banks refuse to extend credit to companies that have a commercial relationship with PDVSA, the sources said.

The sources said foreign oil companies funding projects in Venezuela and financial entities negotiating with PDVSA were avoiding signing agreements that could involve Zerpa.

Major oil company China National Petroleum Corporation (CNPC) has pulled back from funding some operations at its joint venture in Venezuela, a source at PDVSA said.

Neither PDVSA nor the Information Ministry responded to requests for comment. Zerpa was not immediately available to comment.

“PDVSA will face additional trouble just by keeping a sanctioned individual as CFO,” said Jorge Piedrahita, chief executive of broker-dealer Gear Capital Partners, who has been involved with Venezuelan debt for many years.

“Even the Russians and China’s Development Bank should be worried about signing something with him as they can be subject to collateral damage from sanctions just by association.”

A close Maduro ally, Zerpa, 34, rose to prominence by leading the bilateral Venezuela-China fund through which Caracas borrows from Beijing and repays loans in oil and fuel. Venezuela has borrowed over $60 billion from China, earning Zerpa the nickname “Zerpa the Chinese.”

Two additional financial sources said having Zerpa as the company’s head of finance had made it impossible for U.S. entities to assist PDVSA in debt refinancing, even before the U.S. economic sanctions.

Even basic activities, such as a conference call with bondholders, are now essentially unthinkable, the sources said.

Sanctions against Zerpa are having a knock-on effect on Wall Street, affecting imports of food and medicine to Venezuela made through funds headed by Zerpa, according to Delcy Rodriguez, president of Maduro’s new legislative assembly.

“This wasn’t done to affect Venezuelan officials but rather the entire population,” Rodriguez said on Monday.

Zerpa has held several high-profile posts including heading Venezuela’s state economic development bank Bandes and off-budget investment fund Fonden.

Opposition lawmakers have said he is an example of how the late Hugo Chavez’s “21st century socialism” has allowed unprepared political figures to wield power over financial deals.

“I have a negative opinion of him because of the way he handled the Chinese fund,” said opposition lawmaker Angel Alvarado, describing Zerpa as Maduro’s “finance tsar.”

U.S. pressure could force PDVSA to remove Zerpa from his post, at least on paper. However, PDVSA has had issues in the past that have led investors to tread cautiously with Venezuela.

“In part, the sanctions codify an already existing situation in which PDVSA and the Republic have little to no access to international financial markets due to the combination of political risk, unsustainable policies, concerns about legality of new issues and reputational risk from providing funds to the Venezuelan government,” investment firm Torino Capital wrote in a report to clients after Friday’s sanctions.