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7 Million Barrels Of Venezuelan Crude Sit In Gulf Of Mexico

Tankers carrying as much as 7 million barrels of Venezuelan heavy crude are sitting in the Gulf of Mexico awaiting some semblance of clarity on how the situation in the South American country will develop after the latest round of sanctions imposed on Caracas by Washington and targeting specifically state oil company PDVSA.

Reuters cites shipping data and industry sources as saying some tankers are being put on hold because their cargoes were bought before the sanctions were imposed while others were idling in the ocean because buyers were not sure who they were supposed to pay for the deliveries.

The latter problem, Reuters reports, concerns an aspect of sanctions that bans U.S. buyers of Venezuelan crude to pay for the commodity directly to PDVSA accounts. They are to pay for it by transferring the money to escrow accounts, which have not yet been set up.

These accounts will be controlled by Venezuelan opposition leader Juan Guaido, who declared himself interim president last month, as required by Venezuelan constitution in case of problematic election results that necessitate a repeat of the vote, which Guaido is calling for. The U.S. along with several South American countries and a handful of European states have thrown their support behind Guaido and insisted that elected president Maduro call new elections and ensure their transparency.

Yet some are seeing an opportunity, according to Reuters’ sources. Some of the tankers floating in Venezuelan waters and elsewhere in the Gulf are being used as floating storage by traders quick to take advantage of PDVSA offering crude on the open market before the sanctions kicked in.

“There were many cargoes of Venezuelan crude already in the Gulf when sanctions were announced,” said one trader who does business with the Venezuelan state firm. Others, however, “cannot find who to sell them to due to sanctions,” the source added.

By Irina Slav for Oilprice.com

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