Washington is easing its six-year-old sanctions against Venezuela. The US has issued a six-month licence authorising transactions in Venezuela’s oil sector after Venezuelan administration and opposition leaders reached an agreement to ensure fair 2024 elections.
The Latin American country’s petrochemical industry is on the brink of being able to pump 200,000 more barrels of crude a day — a roughly 25% jump in production.
“On the margin, this is a positive development for the tanker market as increased cargo flow into the non-dark fleet could be on the horizon,” analysts at investment bank Jefferies noted in an update to clients.
Venezuelan crude oil production has risen to 0.8m barrels per day from the lows of 0.3m barrels per day in 2020, but remains below the 2.5m barrels per day seen pre-2017.
Venezuelan state-run oil company PDVSA has already begun contacting customers with crude supply contracts, according to Reuters.
Venezuelan crude oil exports today mostly head to China. Recent easing of sanctions has seen a small increase of flows to Spain and the US.
Tanker experts at brokers Braemar expect the extra Venezuelan oil will mostly flow to the US Gulf, with some additional barrels to Europe, likely to back out some US Gulf crude imports from Saudi Arabia and other Middle Eastern producers.
“The tonne-mile effect of this switch will be net bearish for tanker demand, although the additional crude would boost global oil trade in the short-term – as it slows a broadly-expected stock draw over the next few months,” Braemar suggested.
