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Shares in Russia’s largest oil producer, Rosneft, slumped on Friday on the Moscow Stock Exchange, following a report on Thursday that the United States is thinking about slapping sanctions on the Russian oil giant for keeping business ties with the regime of Venezuela’s Nicolas Maduro.
Rosneft’s shares opened sharply down on Friday and were losing 5 percent in the early afternoon, before erasing some of the losses to trade down 3.41 percent at 5:13 p.m. Moscow time.
The share decline today was the sharpest one-day drop in nearly two years, since April 2018.
On Thursday, Bloomberg reported, quoting people familiar with the issue, that the United States is considering whether to sanction Rosneft over its continued business with Nicolas Maduro’s regime. The U.S. administration, however, is concerned that sanctions on Rosneft—a key trading partner for Venezuelan oil—would create chaos on the market and push oil prices up, according to Bloomberg’s sources.
Rosneft has four joint ventures with PDVSA that produce oil and it also became the largest receiver of Venezuelan crude oil last year: the Russian company sold the oil on behalf of PDVSA and kept the proceeds as payment on billions of dollars in loans to the embattled Venezuelan company.
Earlier this week, a senior U.S. administration official said that the Trump administration is keeping a close eye on companies that are still doing business with Venezuela and is ready to mount pressure on them, up to and including sanctioning them.
Last October, Elliott Abrams, U.S. Special Representative for Venezuela, told the Financial Times that Russia’s Rosneft is “really central to the regime’s survival,” because it buys the oil Venezuela produces and helps it sell the oil and arrange the financing. The U.S. Administration is thinking about slapping sanctions on Rosneft, but it hasn’t done it yet, as it is looking at a broader context in the relations with Russia, Abrams told FT.
The interview drew a reaction from Rosneft, which said in a statement that the U.S. is hypocritical in its selective sanctions and sanction waivers against Venezuela as it grants American and pro-American companies extensions of licenses to operate in Venezuela.
“Thus, USA officials demonstrate hypocrisy by selectively - in violation of international law - granting advantages to “their” companies to the detriment of competitors,” Rosneft said last October.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.