U.S. Sells First Venezuela Oil Cargo for $500 Million

The United States has sold the first cargo of Venezuelan cargo it received from the country after the ousting of President Nicolas Maduro. The sale fetched $500 million, an unnamed Washington official told media.

CNN quoted the source as saying there would be more sales in the coming days. Earlier this month, President Donald Trump said Venezuela would “turn over” between 30 and 50 million barrels of its crude to the U.S.

Reuters quoted the Washington official as saying the proceeds of the sale were out into bank accounts under the control of the U.S. federal government. Another source said at least one of these accounts was in Qatar, which is considered a neutral location “where funds can move with U.S. approval and without risk of seizure,” according to Reuters.

Meanwhile, commodity traders are vying for Venezuelan oil deals with Washington following the latest events. Companies including Chevron, Vitol, and Trafigura are seeking to expand their fleets in order to be able to handle as big a portion of those 30-50 million barrels as possible.

Crude oil exports could eventually approach the roughly 500,000 barrels per day Venezuela shipped to the U.S. before the latter showered it with sanctions, but unnamed sources who spoke to Reuters warned that the first shipments would come from oil in storage, accumulated to date. That could take three to four months and will also involve clearing up and resolving bottlenecks at the Jose terminal, where storage capacity is limited.

Earlier this week, Enverus predicted that Venezuela’s oil production could expand to 1.5 million barrels daily by 2035, which would represent a 50% increase on current production rates. Yet Venezuela’s oil output could swell twice as much under Enverus’s best-case scenario, to hit 3 million barrels daily in 2035. That, however, would depend on global demand and supply balances.

By Charles Kennedy for Oilprice.com

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