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Breaking News:

Russia Decides Not To Boost Oil Output

Economic Activity Hits A Decade-Low

Economic Activity Hits A Decade-Low

Economic activity has plunged to…

More Traders And Shippers Turn Their Backs On Venezuelan Oil

Tanker Venezuela

Trafigura, Equinor, Exxon, and Unipec are among the companies that are increasingly turning their backs on Venezuelan oil contracts, along with vessel operators, all too aware of the consequences of violating U.S. sanctions against Venezuela.

Reuters reports, citing sources familiar with the situation, that Trafigura, for one, had told its traders to avoid any dealings with Venezuela, both directly and indirectly. At the same time, Unipec—the trading arm of Chinese Sinopec—had revised its oil tanker contracts to state that the vessels it uses have not called at a Venezuelan port in the past 12 months, according to a document seen by Reuters.

Exxon had revised its charter contract to avoid tankers that had called at Venezuelan ports in recent months. Taken together with Unipec’s contract revision, the change affects some 250 tankers.

The Reuters reports follows one by Bloomberg from last month, which said shipping companies were increasingly reluctant to deliver vessels to Venezuela afraid this may lead to them losing the insurance of the vessels.

The Trump administration has been tightening the noose around Venezuela. The latest round of sanctions was signed in August and they spread to anyone doing business with the Maduro government, both U.S. and non-U.S. Following the signing of the order for the sanctions, the Shipowners’ Club told its members to “exercise caution” in their dealings with Venezuela.

Now, with 250 tankers effectively blacklisted, freight rates for oil vessels heading to Asia are rising, with VLCC rates hitting a record $14 million in just a few weeks.

For Venezuela, there is another problem on the horizon. Later this month, waivers will expire for the handful of U.S. companies still operating in the country. There has been no indication that Washington is willing to extend these, which means Venezuela’s oil production could drop by as much as half.

By Irina Slav for Oilprice.com

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