The sanctions announced Friday are the fourth round of penalties created to prod Venezuelan President Nicolas Maduro to free political prisoners and hold free elections.
Tough new sanctions dealing with Venezuela's access to credit were effective immediately, officials aid.
President Nicolas Maduro said their roles would be switched as part of a state effort to stabilize oil prices and prepare for the upcoming summit of major oil producing OPEC nations, according to the Venezuelan Defense Ministry statement.
"Obviously, the US has a lot of influence over the Venezuelan economy", an administration official told reporters.
"We have an obligation to increase military power for the defense and guarantee of national, South American, and Caribbean peace", he continued.
Venezuelan Foreign Minister Jorge Arreaza blasted the move, saying "today's financial sanctions are the worst aggression towards Venezuela in the last 200 years".
The crisis in Venezuela has now reached a breaking point, with millions of people living in abject poverty as a result of skyrocketing rates of inflation that have left the country with chronic shortages of food, medicine, electricity, and sanitary products.
Since the assembly was seated, it has voted by acclamation to oust the nation's outspoken chief prosecutor, take lawmaking powers from the opposition-controlled congress and create a "truth commission" that many fear will be used to silence the government's political opponents. Secretary of State Rex Tillerson has labeled Maduro a dictator for arresting opposition leaders and seeking to revise the constitution. He asked if Americans "want to starve the Venezuelan people" and said his government wouldn't let the U.S.
Maduro and his allies, the official said, have "demonstrated clear intent to rely on repression and corruption to maintain power".
More: Why is Venezuelan President Nicolás Maduro so controversial? It will prohibit the regime and its state-owned oil company Petroleos de Venezuela SA (PDVSA) from selling new bonds to U.S. citizens or USA financial institutions.
American "will not stand by as Venezuela crumbles", Pence added.
Any economic sanctions, however mild, increase the risk Venezuela will default on its ballooning debt. Venezuela and PDVSA are due to pay $3.53 billion in bond payments in October and November.
US and International Monetary Fund officials said Venezuela's economy continues to severely contract, oil production is rapidly declining and the government is liquidating its visible assets - all of which contributes to a deepening humanitarian crisis in the Latin American country. Although the ruling was reversed amid a storm of worldwide criticism, the power grab triggered months of street protests and a government crackdown in which dozens have died. Humanitarian assistance also will be allowed to continue.
At U.N. headquarters, U.S. Ambassador Nikki Haley told reporters: "We have had no choice but to turn around and do the sanctions to get their attention". It is better to hold the threat of oil industry sanctions as leverage, she said. "We have many options for Venezuela, I'm not ruling out military options". "After that, then what?"
"Eulogio, you will do battle in the world", Maduro said.
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