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Venezuela is going to shop around for other buyers of its crude oil, should the United States make good on its threat to impose an oil embargo on the troubled Latin American country, President Nicolas Maduro said on Thursday.
Those comments come after U.S. Secretary of State Rex Tillerson’s Latin American tour that was supposed to garner support for the United States’ stance on Maduro’s oppressive regime.
“If the US puts an oil embargo on us, we will take our boat and go somewhere else,” Maduro said.
While in Argentina, according to Telesur, Tillerson sought support for a full embargo from Argentinian leadership. A full oil embargo on the socialist nation had originally been discussed with Argentina back in November. At that time, Argentina was one of the first Latin American countries to openly support such a bold move.
“I think we should go to a full oil embargo,” Mauricio Macri, President of Argentine said back in November. “Things have gotten worse and worse. Now, it’s really a painful situation. Poverty is going up every day, sanitary conditions are getting worse every day.”
And indeed, things have gotten even worse since then, despite other sanctions the US has imposed, which have done little to deter the Maduro regime.
Meanwhile, Venezuela’s state-run oil company, PDVSA, is bleeding workers by the thousands, and has shed roughly 10,000 employees—representing almost 10percent of its total workforce, according to Univsion. PDVSA’s production is also dwindling, reaching as low as 1.6 million barrels of crude oil daily, the lowest level in nearly 30 years. The workers jumping ship include not just common laborers, but engineers as well.
Despite those facts, Maduro has gone to lengths to not only denounce what he considers an illegal move on the part of the US, but to proclaim an oil production increase of 250,000 barrels per day in January.
A full oil embargo, if made, could have serious ramifications for U.S. refineries that thirst for Venezuela’s heavy crude. But PDVSA’s struggles over the past year have caused the amount of oil it ships to the United States to drop sharply. What started out as 23.2 million barrels shipped from Venezuela to the United States in January 2017 fell to 16.652 million barrels in November—the last month for which there is EIA data.
For comparison, in 2005, Venezuelan oil imports to the US were north of 50 million barrels.
Valero, one of Venezuela’s largest customers, has taken steps to wean itself off PDVSA’s heavy crude in favor of light sweet crude—as much as possible—but as of November, the refiner was still using 200,000 barrels daily.
Gulf Coast refiners, too, which typically prefer the heavy sour crude oil, will likely feel the pinch while it works out how to use domestic oil—of the lighter, sweeter variety that is more accessible. Citgo—PDVSA’s refining arm in the United States, is also one of the biggest users of Venezuelan crude, as is Chevron.
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.