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Spanish Repsol is suspending fuel shipments to Venezuela due to fears that it could violate the US sanctions against the Latin American nation, according to Reuters. The fuel was provided by Repsol to Venezuela in exchange for crude oil.
Repsol and Venezuela began the product swaps since late 2018, and have continued the arrangement until now, despite the sanctions that have been in place for months. Those sanctions ban the use of US financial institutions to conduct oil business with PDVSA.
It is unclear whether this suspension will eventually become permanent, according to Reuters sources, pending the outcome of talks between Repsol and Washington.
The complicated relationship between Repsol and PDVSA is contributing to the growing stockpile of tankers lingering off the Port of Jose—Venezuela’s largest port. At least two tankers chartered by Repsol—laden with PDVSA crude oil—have been sitting off the Venezuelan coast for more than a week. They join an already mounting problem next to tankers chartered by Chevron, Citgo, and Valero who are also having problems figuring out whether doing business with PDVSA is still in their best interest, and if so, how to go about doing that business, specifically how to pay for the crude.
Venezuela is struggling to get its crude oil out of the country, not just because of US sanctions, but because of repeated blackouts that shut the port of Jose. Oil exports fell sharply in February under the weight of the sanctions, and then fell just slightly in March to below 1 million bpd.
Exports are likely to fall even further with Repsol suspending its take along with a new round of sanctions set to stop Venezuela’s crude oil from getting to its neighbor, Cuba.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.