Russian fuel exports to the United States (US) are nearing record levels, as the US is looking to replace Venezuela with an alternative provider of heavy fuel to American refineries. From January to June of this year, oil shipments from Russia to the US were marked at 5.3 million tons, well on track to match the record high from 2019, even in spite of reduced demand during the coronavirus pandemic.
The US mostly produces light oil, which is not compatible with local refineries, as they are built to refine the kind of heavy oils that Venezuela specializes in. However, last year, the US imposed sanctions on the Venezuelan state-owned oil company PDVSA as part of its ‘maximum pressure’ strategy to force a transition in power away from President Nicolás Maduro. The US recognizes opposition leader Juan Guaidó as the legitimate leader of the South American country.
Even during the ongoing crisis, the US has pressured multiple companies that certify vessels as “seaworthy” and several insurers to withdraw their services from Venezuelan tankers. The UK’s Lloyd’s Register (LR), a renowned ship classifier, for instance, is no longer serving eight tankers that were involved in trade with Venezuela. The German DNV GL Maritime has implemented similar changes.
The risk of secondary sanctions is simply too great for some countries and companies. Panama and Liberia, too, have withdrawn registration for ships that violate US sanctions. Several companies in China and Russia have also put an end to oil trade with Venezuela. Likewise, Mexico, which earlier said it would sell gasoline to Venezuela as a humanitarian gesture, later froze the bank accounts of the Mexican companies and nationals involved in reselling Venezuelan crude.
Iran, however, remains unperturbed, and sent five tankers of gasoline to Venezuela in May. In fact, Iran’s Foreign Ministry spokesman, Seyed Abbas Mousavi, said that cooperation between the two countries will continue or even increase, even in the face of sanctions.
American sanctions are largely responsible for pushing Venezuela’s oil exports to their lowest levels in almost 80 years, which has left the already embattled and cash-strapped country struggling to meet the basic nutritional and medicinal needs of its population.
The increase in US-Russia fuel trade has been an ongoing process. Exports from Moscow to Washington doubled to 11 million tons last year, and thus they are set to match or beat that figure this year.
Russian Fuel Exports to US Nearing Record Levels as US Looks to Replace Venezuela
The US is looking for an alternative provider of heavy fuel to American refineries.
July 15, 2020
IMAGE SOURCE: DAVID PARROTT/REUTERS