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Oil inventories at the port of Jose have reached 11.8 million barrels, which is the highest since August, Reuters reports, citing a PDVSA document. The port is the largest export hub for Venezuelan oil.
The reason inventories are on the rise is, once again, U.S. sanctions against Caracas. These have made buyers reluctant to risk importing Venezuelan oil now that a grace period is expiring for several commodity trading companies that Washington had allowed to continue buying Venezuelan oil for a while. The companies include Spain’s Repsol and Italy’s Eni, as well as Thai Tipco Asphalt.
PDVSA’s problem, however, is that rising inventories are filling up its available storage space. According to Reuters, the 11.8 million barrels were an increase from just 5.6 million barrels a month ago and there was just 3 million barrels of space left.
If inventories continue to build, PDVSA would have to start reducing production for lack of storage space. This happens soon after the company managed to boost its production at some of its joint ventures.
Just a few days ago, Bloomberg reported PDVSA’s crude oil inventories at the port of Jose had climbed to 10.6 million bpd in the three weeks to October 23, even after Eni, Repsol, and India’s Reliance bought 9.7 million barrels of crude from PDVSA during the period.
Venezuela’s exports have significantly slumped since the U.S. imposed sanctions on its crude oil exports in early 2019, essentially prohibiting U.S. refiners from buying Venezuelan crude, which was a large part of the imports of crude for U.S. Gulf Coast refiners.
Despite the sanctions, the country exported some 690,000 bpd in September—the highest daily export rate since April. It has switched to crude-for-diesel swap deals, which are still allowed for humanitarian reasons. However, Bloomberg noted last Friday, Washington is looking for ways to cut off this lifeline to the Maduro government as well.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.