Venezuelan Oil Exports to US Still Primary Source of Cash

Venezuelan Oil Exports to US Still Primary Source of Cash

Venezuelan Oil Exports to US Still Primary Source of Cash

However, this bullish view is eclipsed by the above mentioned possibility of a slowdown in the global economy and fears of a supply glut on the back of increasing USA oil production.

Oil prices have gone upwards on Friday following expectations that Venezuelan crude exports could soon be disrupted with rising turmoil in the region.

Record U.S. production would likely offset any short-term disruptions to Venezuelan supply due to possible U.S. sanctions, Britain's Barclays said in a note. USA crude stockpiles rose the most since November last week and gasoline inventories climbed to a record, government data showed on Thursday.

In total, the net imports of crude oil and products in the United States during last week was 2.24 million barrels per day, down by 757,000 barrels per day from the previous week.

According to EIA's Annual Energy Outlook 2019 released on Thursday, the USA position as a net energy exporter would remain from 2020 through 2050 as a result of large increases in crude oil, natural gas, and natural gas plant liquids production coupled with a slow growth in US energy consumption. A report from the American Petroleum Institute on Thursday said that the USA has surplus gasoline stockpiles that "could approach burdensome levels" and force gas prices down further.

US refineries that depend on Venezuela's heavy crude would have even more trouble securing supplies as Canadian and Mexican crude are often not as discounted and are limited in availability.

The U.S. could end up having to import some of that heavy crude from the Middle East, adding transportation costs. The primary importers of Venezuelan crude are Citgo, Valero Energy, and Chevron.

The American Fuel & Petrochemical Manufacturers, which represents 95 percent of the refining sector, has lobbied hard over the past two years against any attempts to restrict imports of Venezuelan oil.

Quoting the Annual Statistical Bulletin of the Organization of the Oil Exporting Countries (OPEC), the "NDTV" had stated that Venezuela had 296.5 billion barrels of oil under its control. Hawks in the administration favour a strong round of sanctions including on the oil industry, while others argue for a more restrained approach that would allow Venezuela's collapse to proceed under its own steam, he said. "The airlines and the trucking companies will lose a bit because they'll be paying more for fuel". The country sends 41 percent of its oil exports to the U.S. Critically, U.S. refiners are among the few customers that pay cash to Venezuela for its oil. One proposal would see Washington declare that any payment to Venezuela in return for oil must go to the new government, or perhaps some form of humanitarian account to help feed the country's starving people.

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