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Sanctions Force Chinese Companies To Reconsider Oil Trade With Venezuela

Chinese oil trading companies are mulling over a halt in chartering tankers that have called at Venezuelan ports over the past year as Washington steps up sanctions against the Caracas government, Reuters has reported, citing unnamed sources from the shipping industry.

This time, the focus of attention of the U.S. administration is shipping companies and more specifically, tanker owners and users. The vessels will be added to a blacklist, according to plans, and some that are en route to Venezuela are already turning back, according to the Reuters sources.

“Anything on the potential sanctions list will just become toxic,” one of the sources said. “No one will touch it until it’s clear what the rules will be.”

Bloomberg, meanwhile, cited another unnamed source who said Washington was planning to add as many as 50 tankers to its blacklist and will seek to cut off oil and fuel trade between Venezuela and Iran.

According to a brokerage that Reuters spoke to, there were as many as 77 tankers that have called at Venezuelan ports over the past 12 months, which puts them at risk of being blacklisted.

Related: Why Saudi Arabia Will Lose The Next Oil Price War

The two countries, who are both suffering severe U.S. sanctions already, have been forging a close relationship, with Iran supplying five tankers of fuel to the fuel-starved South American nation, as well as equipment and workers for its refineries.

Venezuela is in the grips of a major gasoline shortage as refineries are unable to operate at run rates higher than 10 percent because of a shortage of diluents necessary for the production of fuels as well as an urgent need for repairs.

At the time when the first tankers with Iranian fuel began arriving in Venezuela, Washington officials said the U.S. administration was considering retaliation for the move but declines to provide any details. The tanker blacklisting seems to be that retaliation.

By Irina Slav for Oilprice.com 

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  • Mamdouh Salameh on June 10 2020 said:
    When Reuters reports a story citing unnamed sources, you bet your money that the story is made up or disinformation.

    Consequently the story that sanctions force Chinese companies to reconsider oil trade with Venezuela probably falls within this description. The reason is that China doesn’t recognize US sanctions on Iran and Venezuela and has so far ignored the sanctions completely 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.

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

    The United States accounts for only 15% of the global economy and this is projected to decline to 13.86% by 2024 and yet it behaves as if it owns the world. Sooner or later there will come a time when the world will tell the United States to go to hell with its sanctions.

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

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