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Oil Is The Only Way Back Up For Venezuela

Oil Is The Only Way Back Up For Venezuela

Venezuela’s economic and humanitarian crisis…

Russia’s Largest Oil Company Ditches Dollar In New Oil Deals

Rosneft

Russia’s largest oil company Rosneft has set the euro as the default currency for all new exports of crude oil and refined products, as the state-controlled giant looks to switch as many sales as possible from U.S. dollars to euros in order to avoid further U.S. sanctions against it.

As of September, Rosneft is seeking euros as the default option of payment for its crude oil and products, Reuters reported on Thursday, quoting tender documents the Russian firm has published.

“Rosneft has recently adjusted all the new contracts for export supplies to euros,” a trader at a company that regularly procures oil from Rosneft told Reuters, adding that buyers have already been notified of the change.

Rosneft is the biggest oil exporter from Russia, selling around 2.4 million barrels per day (bpd) of oil, according to Reuters estimates.  

In the latest tender for a spot sale of 100,000 tons of Urals blend loading from the port of Primorsk at the end of October, Rosneft specifies that the default currency in the payment should be in euros, according to the tender document cited by Reuters.

The United States has not ruled out imposing sanctions on Rosneft over its involvement in trading oil from Venezuela. Rosneft has been reselling the oil from the Latin American country to buyers in China and India and thus helping buyers hesitant to approach Venezuela and its state oil firm PDVSA because of the U.S. sanctions on Caracas, and, at the same time, helping Venezuela to continue selling its oil despite stricter U.S. sanctions.

In August, Rosneft told customers that oil product sales in tender contracts will be priced in euros instead of U.S. dollars, trading sources told Reuters back then.

Rosneft’s move was seen by traders and analysts as a future hedge against potential new U.S. sanctions on Russia and/or its oil industry.

By Tsvetana Paraskova for Oilprice.com

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  • Helder dos Reis on October 03 2019 said:
    So much creativity in escaping from sanctions. Following old methods of trading will help to dodge further harassments and prices will plunge.
  • Mamdouh Salameh on October 03 2019 said:
    Russian oil giant Rosneft’s decision to ditch the US dollar in favour of the euro for all new exports of crude oil and refined products is a defensive measure to avoid further US sanctions against it. But it is also part of Russia’s ongoing retaliation against the United States since the imposition of US sanctions on Russia in the aftermath of the annexation of the Crimea. Moreover, this step deprives the petrodollar of an estimated $136 bn from the global oil-traded market being the annual revenue of Rosneft from selling crude oil and refined products around the world.

    This step will also further undermine the petrodollar and, therefore, the US financial system coming after the launching of the petro-yuan in March 2018.

    However, Russia’s retaliation against US sanctions doesn’t stop there. Russia has been openly defying the United States by buying both Iranian crude oil in a barter trade with Iran and also helping Venezuela sell its oil around the world and get paid despite stricter US sanctions.

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

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