{"id":7871,"date":"2019-02-25T01:14:12","date_gmt":"2019-02-25T01:14:12","guid":{"rendered":"http:\/\/www.styledeals.co.uk\/blog\/venezuela-crisis-who-is-buying-its-oil-now\/"},"modified":"2019-02-25T01:14:12","modified_gmt":"2019-02-25T01:14:12","slug":"venezuela-crisis-who-is-buying-its-oil-now","status":"publish","type":"post","link":"https:\/\/www.styledeals.co.uk\/blog\/venezuela-crisis-who-is-buying-its-oil-now\/","title":{"rendered":"Venezuela crisis: Who is buying its oil now?"},"content":{"rendered":"\n
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The United States has imposed tough sanctions on Venezuela’s oil industry to put pressure on President Nicol\u00e1s Maduro to step down.<\/p>\n

Oil dominates Venezuela’s economy, accounting for almost all of its export earnings. <\/p>\n

Its biggest customers have been the US, followed by India and China.<\/p>\n

But over the past decade, oil production has collapsed and the country is in a deep economic crisis.<\/p>\n

So what effect are the sanctions having and who is buying its oil now?<\/p>\n

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What are the sanctions?<\/h2>\n

The sanctions block US companies doing business with Venezuela’s state oil company, the PDVSA, and freeze the company’s assets in the United States.<\/a><\/p>\n

These measures do not cut off imports entirely, but they do require payments to be made into accounts that Venezuela’s state oil company cannot access. <\/p>\n

Sanctions have also had an impact on access to the chemicals required to process the oil.<\/p>\n

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Venezuela’s heavy crude is almost solid when it comes out of the ground, so it cannot flow through pipelines. <\/p>\n

It needs chemicals, diluents such as naphtha, to turn into a lighter substance that can eventually be exported. Sanctions include a ban on US firms exporting diluents.<\/p>\n

Venezuela must import these, and in recent years they have come from the US, said Shannon O’Neil, senior fellow for Latin America Studies at the Council on Foreign Relations. <\/p>\n

The Russian firm Rosneft is reportedly helping to fill this particular gap.<\/a><\/p>\n

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Where is Venezuela’s oil now going?<\/h2>\n

Currently sitting off the Venezuelan coast are tankers holding in the region of 10 million barrels of oil, according to Kpler, which tracks commodities. <\/p>\n

They were originally destined for the United States, but are stranded as a result of the sanctions. <\/p>\n

Venezuela’s government has been looking for new buyers for its oil and says it wants to double shipments to India.<\/a><\/p>\n

But although there has been a recent increase in exports to India, it is not a substantial one, says Samah Ahmed, a crude oil analyst at Kpler.<\/p>\n

Exports to China are also not encouraging and have in fact been dropping in line with a general decline in Venezuela’s total production.<\/p>\n

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Selling more oil to markets in Asia would increase transport costs, because ports in Venezuela are not well-equipped to load tankers for travelling long distances.<\/a><\/p>\n

Exports to India may be heavily discounted “because of quality issues and to compete with Middle Eastern grades”, says Paola Rodriguez-Masiu, an analyst at Rystad Energy. <\/p>\n

But there is certainly a demand for heavy crude oil such as that found in Venezuela.<\/p>\n

There is a global shortage because of sanctions on Iranian oil, while lower levels of production in Canada, Mexico and Opec member countries has also had an impact. <\/p>\n

US importers will need to find new suppliers of heavy crude, which it uses to produce diesel and jet fuel.<\/a><\/p>\n

“The Venezuelan crisis has made heavy crude more expensive for the US,” says Ms Rodriguez-Masiu. <\/p>\n

But this will not help Venezuela, desperate to find new markets for its oil at a time of deepening economic and political crisis.<\/p>\n

The sanctions will continue to hit the country hard. <\/p>\n

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