Tanker analysts have been studying the ramifications for global oil trades if Venezuelan sanctions are lifted in the wake of the Russian invasion of Ukraine.
While there has been much conjecture on what a possible lifting of Iranian sanctions would mean for tanker shipping, less research has been carried out on the implications if Venezuela was welcomed back into the global oil trades.
“The need to find viable alternatives is growing,” brokers Gibson noted in its most recent weekly report, discussing the fallout from the Russian war with Ukraine. The prospect of returning Venezuelan crude is on the table, Gibson noted, with US diplomats meeting officials in Caracas to discuss such a deal.
Venezuelan state-owned energy giant PDVSA was sanctioned in 2019 by the Trump administration and diesel for crude swap agreements on humanitarian grounds were blocked in 2020.
“Years of underinvestment means it would take time for Venezuela to build up exports to a level that could make a meaningful impact on oil prices,” Gibson suggested
Surpassing 1m barrels per day of exports from 0.4m in 2021 would likely take at least a year, Gibson predicted.
According to a new report from rival tanker broker Poten & Partners, the US hs indicated that, in exchange for sanctions relief, a portion of Venezuelan’s crude has to be shipped to the US.
“This will provide more employment opportunities for Caribbean Aframaxes but given the short-haul nature of this trade, we expect the impact on tonnage balances (and rates) in the region to be limited,” Poten forecast.
Further afield, the lifting of oil sanctions could also reignite and legitimise the long-haul trades to India and China, creating additional long-haul employment for VLCCs and reducing the trading opportunities for the rogue tanker fleet, something Poten hailed as a “win-win” for the large tanker market.