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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Washington Presses Traders To Stop Buying Venezuelan Oil

The U.S. administration is trying to pressure foreign commodity traders and refiners to suspend their trades with Venezuelan oil in the latest push against the Maduro government. The information comes from unnamed sources that spoke to Reuters.

Such deals are not covered by the latest U.S. sanctions, which is why, apparently, Washington is contacting the buyers directly. According to the sources, the Treasury’s Office of Foreign Assets Control had told the traders and refiners that any sort of a deal, be it direct, indirect, or even a barter deal, would be punished as a breach of sanctions despite these only concerning U.S. entities.

“This is how the United States operates these days. They have written rules and then they call you to explain that there are also unwritten rules that they want you to follow,” one of the sources said.

The Trump administration is prioritizing the suspension of sales of diluents to Venezuela’s troubled state oil company, Reuters notes. PDVSA needs the diluents to make its extra heavy crude liquid enough to load on tankers for export.

The Reuters report comes days after India’s Reliance Industries said it had stopped supplying PDVSA with diluents from its U.S.-based subsidiary to avoid sanction violation. However, it said it would continue selling the refined products to the Venezuelan company from its Asian and European subsidiaries. Related: IMO2020: Can We Expect Extreme Price Shocks?

The push against oil traders and refiners comes amid a loss of momentum in opposition leader Juan Guaido’s rise to power. Guaido established control over PDVSA’s U.S. business Citgo earlier this month with the help of Washington and received access to the company’s coffers. This should have financed the opposition’s efforts to overthrow the Maduro government, but for now these efforts are not yielding any results despite the strong support of the United States.

Venezuelan oil exports fell to less than a million barrels daily in the first four weeks after the latest sanctions came into effect in January. That’s down from more than 1.5 million bpd in December. Exports to the United States have fallen to zero as a result of the sanctions, but Venezuela is still shipping oil to Russia and China, as well as India.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on March 29 2019 said:
    Are the sanctions against Venezuela already failing to adversely affect Venezuelan oil production and exports to the extent that the United States is now resorting to pressure foreign commodity traders and refiners to suspend their trades with Venezuelan oil?

    Having failed to stop Venezuela’s crude oil production and exports, the US-backed coup and its accomplices plunged Venezuela for the second time in a massive power outage in order to stop oil production and exports. They did it two weeks ago but Venezuela managed to resume oil production and exports.

    The Trump administration suspended sales of diluents to Venezuela to stop the country’s oil production and exports but Russia and India came to the rescue by providing the needed diluents.

    The push against oil traders and refiners comes amid a loss of momentum in the US-backed coup. Moreover, Venezuela has managed to redirect the 500,000 barrels a day (b/d) it used to export to the United States to China, India and the European Union without any loss to the global oil supply. China has been buying big volumes of Venezuelan oil estimated at 531,000 b/d. China of course wants to secure as much of cheap supplies as possible, especially from those who are friends with it such as Venezuela and Iran.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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