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If the U.S. administration decides to impose sanctions on Venezuela that include a ban on crude oil imports from the South American country, refiners on the Gulf Coast might pay a price, according to PIRA Energy’s managing director for oil, Rick Joswick.
The possibility of sanctions against senior government officials in Caracas and against the oil industry of conflict-torn Venezuela surfaced earlier this week, when Washington officials told media “all options were on the table.” This followed President Trump’s statement from Monday that if Caracas goes ahead with its plan for a constituent assembly election on July 30, Washington will respond with “strong and swift economic actions.”
According to Joswick, the impact of any sanctions on U.S. refiners will depend on their severity and extent. For instance, he said, if the administration opts for a duty on Venezuelan oil in the range of US$2-3 per barrel, refiners will adapt. If, however, Washington goes for a full ban from August 1, Gulf Coast refiners will be hard pressed to find alternative suppliers of heavy crude urgently.
Venezuela is the third-largest supplier of crude oil to the U.S., and as of April it was also the largest supplier of heavy crude to Gulf Coast refineries, feeding 795,000 barrels daily into the processing facilities.
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The latest chapter in the Venezuelan crisis started after President Nicolas Maduro called a vote for a special parliament—a constituent assembly—that could amend the country’s constitution, which many observers outside Venezuela consider an attempt to stifle the local opposition and cement the Socialists in power.
Besides the U.S., Colombia, France, Spain, and the EU have called on Maduro to cancel the election, while the Venezuelan opposition called the first nationwide strike since 2002 yesterday. According to opposition sources, 85 percent of the country has joined the strike. As of today, three people have been reported dead and more than 300 have been arrested.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.