How U.S. sanctions on Venezuela have left a dozen oil tankers idling with no place to go

Tankers like this one, filled with heavy crude, have been left in the lurch as a result of U.S. sanctions on shipments out of Venezuela. (Jonathan Bachman/Reuters)

The United States has sanctioned Venezuela and this is already causing havoc. And is that according to estimates there are up to 7 million barrels of Venezuelan oil floating in tankers without a specific destination. These sanctions imposed since last week are undoubtedly causing havoc in oil companies that send crude oil to the whole world and cause energy prices to be derailed in the process.

These sanctions have been imposed in order to try to deprive Nicolás Maduro’s regime of the money it needs to hold on to power. It has been directly affected by Petróleos de Venezuela S.A. (PDVSA, for its acronym in English). Which is the Venezuelan state oil and natural gas company. It has activities in exploration, production, refining, and export of oil, as well as exploration and production of natural gas. Since its foundation on January 1, 1976, with the nationalization of the Venezuelan oil industry, PDVSA has dominated the oil industry of Venezuela, the fifth largest oil exporter in the world.

Frozen assets

Such sanctions have effectively frozen all of PDVSA’s assets in the United States. Thus, they require that all money obtained in agreements between the company and US firms be kept in escrow accounts that will be inaccessible while Maduro remains in power.

What is also a fact is that not only is it more difficult for Venezuela to export oil. But it has also become harder and more costly for US companies to send fuel products known as diluents in the other direction. And the objective was a measure of pressure for Maduro. Despite this, there is an unintended consequence of this plan and that is that it has left oil tankers floating in the Caribbean, without knowing where they should go to try to unload their cargo.

Meanwhile, according to the TankerTrackers.com vessel monitoring website, there are about a dozen oil tankers that are located on the Venezuelan coast or in other parts of the Caribbean and the Gulf of Mexico. At least half of them are loaded with Venezuelan crude that suddenly has nowhere to go. Under normal circumstances, the vast majority of Venezuelan crude is destined for refineries on the Gulf Coast of the United States. However, with those customers effectively blocked, that oil is having a hard time finding alternative customers.

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Source: Pete Evans |CBC News