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If the United States imposes a ban on crude oil imports from Venezuela, prices for the heavy sour crude grades like the one Venezuela is supplying to the U.S. would increase, Valero Energy Corp’s Vice President Gary Simmons said on Thursday, adding that a ban would send Venezuelan cargoes to markets other than the U.S. Gulf Coast.
The U.S. Treasury imposed on Wednesday sanctions against 13 officials of the Government of Venezuela, including on the former and current vice presidents of finance of state-owned oil company Petroleos de Venezuela (PDVSA). The sanctions were imposed ahead of a planned controversial vote on July 30 that will have the power to rewrite the Venezuelan constitution and may choose to dissolve Venezuelan state institutions.
According to Platts, a senior U.S. administration official said on Wednesday that if Venezuelan President Nicolas Maduro goes forward with the Sunday election, President Donald Trump is expected to issue “strong and swift” sanctions on Venezuela, including a ban on Venezuelan crude oil sales into the U.S.
“The natural trade flow for a lot of Venezuelan production should be to the U.S. Gulf Coast,” Reuters quoted Valero’s Simmons as saying today.
“If sanctions were imposed, those barrels will continue to flow to other markets. And then, we’ll have to buy barrels away from other markets to supply our system,” the manager noted.
Last month, Valero Energy was the main recipient of Venezuela crude oil. Not only is the United States the main buyer of Venezuela crude oil, but companies such as Valero Energy, Phillips 66, Chevron, and PBF Energy were the major buyers of Venezuelan crude in 2016.
If the U.S. administration decides to impose sanctions on Venezuela that include a ban on crude oil imports from the South American country, refiners on the Gulf Coast might pay a price, according to PIRA Energy’s managing director for oil, Rick Joswick.
At 795,000 bpd, Venezuela was the biggest foreign provider of crude oil to the U.S. Gulf Coast in April, the latest available monthly data by the EIA show. Saudi Arabia, Iraq, Mexico, and Canada followed down the ranking of the biggest providers of crude oil to the U.S. Gulf Coast in April.
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.