US sanctions on Venezuela's national oil company have accelerated the unprecedented collapse of its oil output and set off a domino effect in the global energy market.
The sanctions, which were announced on January 28 in a bid to speed up Nicolas Maduro's exit, have sent US Gulf Coast refineries scrambling to find alternate sources for the heavy crude they once relied on from Venezuela.
And Venezuela, which as of last fall was the No. 4 crude importer to the United States behind only Canada, Saudi Arabia and Mexico, has been forced to find new customers and new ways to dilute its very heavy crude to ready it for export.
"Sanctions are already having a crippling effect on oil supplies," Ryan Fitzmaurice, energy strategist at Rabobank, wrote to clients in a report last week.
Heavy crude is typically cheaper than light crude, but demand for it has become so intense that it's suddenly trading at a premium to lighter barrels. US Gulf Coast refiners, led by Citgo, Chevron and Valero, blend heavy crude with lighter barrels found in US shale oilfields to churn out gasoline, diesel and jet fuel.
Meanwhile, Venezuela's government, which relies on oil exports for 90% of its revenue, is searching for other customers for its crude. Venezuela's oil minister Manuel Quevedo traveled to India last week in an apparent bid to drum up support.
"They're scrambling to find buyers for their crude," said Matt Smith, director of commodity research at ClipperData.
Full meddling:
https://www.cnn.com/2019/02/19/investing/venezuela-oil-sanctions-pdvsa/index.html
The sanctions, which were announced on January 28 in a bid to speed up Nicolas Maduro's exit, have sent US Gulf Coast refineries scrambling to find alternate sources for the heavy crude they once relied on from Venezuela.
And Venezuela, which as of last fall was the No. 4 crude importer to the United States behind only Canada, Saudi Arabia and Mexico, has been forced to find new customers and new ways to dilute its very heavy crude to ready it for export.
"Sanctions are already having a crippling effect on oil supplies," Ryan Fitzmaurice, energy strategist at Rabobank, wrote to clients in a report last week.
Heavy crude is typically cheaper than light crude, but demand for it has become so intense that it's suddenly trading at a premium to lighter barrels. US Gulf Coast refiners, led by Citgo, Chevron and Valero, blend heavy crude with lighter barrels found in US shale oilfields to churn out gasoline, diesel and jet fuel.
Meanwhile, Venezuela's government, which relies on oil exports for 90% of its revenue, is searching for other customers for its crude. Venezuela's oil minister Manuel Quevedo traveled to India last week in an apparent bid to drum up support.
"They're scrambling to find buyers for their crude," said Matt Smith, director of commodity research at ClipperData.
Full meddling:
https://www.cnn.com/2019/02/19/investing/venezuela-oil-sanctions-pdvsa/index.html