Venezuela and the United States have reached a deal under which authorities in the South American country will agree to export $2 billion worth of crude oil to the U.S., according to President Donald Trump.
The agreement with the U.S.-compliant leadership in Caracas would boost supply of heavy crude to the U.S. Gulf Coast refineries and potentially further cripple illicit Venezuela shipments of cheap crude to China, Reuters notes.
Venezuela’s state oil firm PDVSA has been unable to ship oil cargoes to Asia for nearly a week, as the U.S. “oil quarantine” of Venezuela continues, shipping data reviewed by Reuters showed on Tuesday.
Chevron is the only Western oil company currently authorized by the U.S. Treasury to operate in Venezuela. Chevron ships the crude to the U.S. Gulf Coast.
Venezuelan shipments to Asia, however, are at a standstill, and China, the top oil customer of Venezuela, is getting lower volumes of crude.
In fact, Chinese oil buyers have reduced their intake of Venezuelan oil as the discount between Brent and the country’s flagship Merey crude shrank from $15 per barrel last month to $13 per barrel now, Bloomberg reported on Tuesday, citing unnamed sources.
The price rise of Venezuelan oil follows the U.S. naval blockade that has disrupted tanker traffic to and from Venezuela, and that is not about to be lifted anytime soon, as stated earlier this week by Secretary of State Marco Rubio.
The U.S. is now looking to gain access to Venezuela’s crude, and President Trump claimed on Tuesday that Venezuela would be “turning over” between 30 and 50 million barrels of oil to the United States.
President Trump has insisted that Venezuela’s interim Delcy Rodriguez give the U.S. and private companies “total access” to the Venezuelan oil industry.
The crude exports to the U.S. could be drawn from floating storage that has piled up since the U.S. initiated the naval blockade offshore Venezuela in the middle of December.
“Venezuela has an opportunity now to actually have capital come in and rebuild their economy and take advantage,” U.S. Interior Secretary Doug Burgum told Fox News on Tuesday.
“With American technology, American partnership, Venezuela can be transformed.”
By Charles Kennedy for Oilprice.com
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