U.S. sanctions on Venezuela would reroute crude, leave refiners short
By Devika Krishna Kumar and Collin Eaton (Reuters) - Potential U.S. sanctions on Venezuela's crude oil exports would cut off the nation from Gulf Coast refiners that are among its biggest customers, likely forcing it to send more crude to China, India or other Asian countries, traders said on Wednesday. U.S.
By Devika Krishna Kumar and Collin Eaton
(Reuters) - Potential U.S. sanctions on Venezuela's crude oil exports would cut off the nation from Gulf Coast refiners that are among its biggest customers, likely forcing it to send more crude to China, India or other Asian countries, traders said on Wednesday.
U.S. refineries that depend on Venezuela's heavy crude would have even more trouble securing supplies as Canadian and Mexican crudes are often not as discounted and are limited in availability.
The United States is considering moves to cripple Venezuela's oil shipments, which account for nearly all of the country's exports, in response to the reelection of President Nicolas Maduro that was widely viewed as a sham.
Washington has recognised opposition leader Juan Guaido as Venezuela's president as protests against Maduro erupt across the country. It is also considering sanctions on oil deliveries, a move it has until now resisted, energy company sources told Reuters on Wednesday.
Venezuela has, on average, exported about 500,000 barrels of crude a day to the United States in 2018, according to U.S. Energy Department data. The U.S. share of its exports has declined in recent years with more shipments going to Russia and China.
[GRAPHIC: Venezuelan crude exports to the United States: https://tmsnrt.rs/2S4YIXB]
Those deliveries are being made largely through oil-for-debt repayment structures as output from state-run oil company Petróleos de Venezuela, S.A., known as PDVSA [PDVSA.UL], has slumped to near 70-year lows in a nationwide economic crisis. Venezuela's output has been cut in half since 2016 to less than 1.2 million bpd, according to figures from OPEC secondary sources.
In the wake of sanctions the country could seek additional deals with Turkey, India or other Asian nations, one trader of Venezuelan crude said.
"It will be costly for Venezuela but eventually they'll be able to sell that oil to Asia at a discount. There will be a period in the middle in which they have difficulty selling those barrels," said Francisco Monaldi, fellow in Latin American Energy Policy at the Baker Institute for Public Policy at Rice University in Houston.
[GRAPHIC: Top U.S. importers of Venezuelan crude: https://tmsnrt.rs/2RYGk2E]
Though the United States produces nearly 12 million barrels of oil a day, complex Gulf Coast refineries need heavier crude grades to produce diesel and other high-margin products, and cannot simply sub in light crude.
Prices of heavier U.S. grades like Mars Sour
"It would make a tight market even tighter. If it happens, it would be an unambiguous headwind for refiners already struggling to find supplies," said Bob McNally, president of Rapidan Energy Group, an energy consultancy in Bethesda, Maryland.
[GRAPHIC: Venezuelan crude exports to U.S. refiners: https://tmsnrt.rs/2S42EI5.]
Traders said the United States may need to sell oil from the U.S. Strategic Petroleum Reserve to cover supply shortfalls as additional shipments are secured via Canada or Mexico.
Sanctions could also include U.S. exports of petroleum products to Venezuela, used for blending with Venezuelan heavy crude.
(Reporting by Devika Krishna Kumar, Collin Eaton and Stephanie Kelly; additional reporting by Jarrett Renshaw and Luc Cohen; graphics by Stephanie Kelly; Writing by David Gaffen; Editing by Richard Chang)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.