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Oil Prices Rally On COVID Optimism

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Oil markets reacted bullishly to…

China Continued Buying Venezuelan Oil Despite U.S. Sanctions

Oil shipments from Venezuela to China continued even after the United States tightened the screws on Venezuelan oil exports last August, threatening sanctions on all companies doing business with Nicolas Maduro’s government, Reuters says in a special report, quoting ship-tracking data, PDVSA documents, and oil analysts.

According to Reuters’ findings, even after the U.S. increased the sanctions pressure on Venezuela, crude oil from the Latin American country continued to flow into China via the Switzerland-based unit of Russian oil giant Rosneft and after ship-to-ship transfers of the crude to conceal that its place of origin was Venezuela, Reuters has found.  

Between July and December, 18 tankers carried a total of 19.7 million barrels of rebranded Venezuelan crude oil to Chinese ports, Reuters found.

After the new U.S. sanctions in August, China National Petroleum Corporation (CNPC) – one of PDVSA’s top buyers of crude oil even after the initial rounds of sanctions on Venezuela took hold — canceled loading plans for Venezuelan oil, after the Trump Administration targeted companies - even foreign ones - doing business with PDVSA, threatening to seize their assets in the United States if they have any.

Shipments of oil from Venezuela to China have continued into this year, too, according to Reuters’ findings.

Earlier this year, the United States slapped sanctions on Rosneft’s Switzerland-based trading arm as part of its attempts to cut off all revenue streams to Nicolas Maduro’s government in Caracas. The U.S. has signaled that it is ready to tighten even more the noose around the Venezuelan government. 

Responding to a Reuters request to comment on the findings about Chinese imports of Venezuelan oil, Rosneft said it had done business in compliance with international legislation.

The U.S. State Department’s Special Representative for Venezuela, Elliott Abrams, told Reuters that the Trump Administration would be taking individual actions with respect to ship-to-ship transfers and that sanctions against Chinese buyers of Venezuelan crude after transshipment were “on the table.”  

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on June 12 2020 said:
    A few days ago, when Reuters reported a story citing unnamed sources saying that US sanctions are forcing Chinese companies to reconsider oil trade with Venezuela, I said then that you could bet your money that the story is made up or disinformation. I was proven right.

    It now transpires that shipments of Venezuelan crude oil continued to flow to China even after the US increased the sanctions pressure on Venezuela via the Switzerland-based unit of Russian oil giant Rosneft and after by ship-to-ship transfers of the crude to conceal that its place of origin was Venezuela. Between July and December, 18 tankers carried a total of 19.7 million barrels (equivalent to a daily average of 107,000 barrels a day) of rebranded Venezuelan crude oil to Chinese ports.

    China doesn’t recognize US sanctions on Iran and Venezuela and has been completely ignoring the sanctions by continuing to deal with both countries accounting for 31% of Iranian crude oil exports or 659,000 barrels a day (b/d) and also continuing to receive Venezuelan crude oil in payment for loans it has extended to South American country.

    And just recently Iran challenged US sanctions by sending five tankers loaded with refined products for Venezuela as well as diluents and equipment and workers for its refineries.

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

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