As if Venezuela’s economic woes were not enough to demand the full-time attention of President Nicholas Maduro and his government, the administration in Caracas must contend as well with the pressures of working out just how it extricates 18.1 million barrels of the country’s oil stuck at sea on an estimated sixteen tankers from the grip of United States-imposed sanctions that international refiners, mindful of threatened penalties by the Donald Trump administration, are avoiding like the proverbial plague.
What is described as “shipping data” that provides these astonishing figures underscores the extent to which the Maduro administration is being denied access to the country’s main source of revenue solely on account of Washington’s disapproval of its ideological leanings.
So severe is the squeeze that Washing-ton has put on Venezuela’s oil-driven economy that the country’s exports are reportedly perilously close to their lowest levels in more than 70 years, a circumstance that has led to a chaotic economic collapse, a slide into crippling poverty, and mass cross-border migration to neighbouring countries.
Washington, this month, has doubled down on its sanctions against the Maduro administration, reportedly black-listing vessels that have ignored its directive that they not enter into trade and transporting arrangements with the state-run Venezue-lan oil company, PDVSA, while threatening to add even more vessels to that list.
The 18-plus million barrels of Venezuelan oil which is currently being treated by most of the world’s shipping companies and buyers as ‘hot property,’ is believed to be the equivalent of close to two months of Venezuelan oil production at its current rate and some of the hapless vessels have reportedly been at sea for more than six months, docking at several ports but being unable to unload.
What is likely to be the fate of the oil stuck at sea is unclear though industry practice suggests that in those circumstances, the cargo eventually is sold at a significant discount. Even assuming that the oil is eventually sold, returns from the proceeds must clear the considerable hurdle of imposing demurrage charges for each day that unloading is not executed. The cost for a vessel transporting Venezuelan oil is estimated at around US$30,000 per day, according to industry figures. One PDVSA customer who reportedly received a cargo of Venezuelan heavy crude in January is left holding the consignment which it is unable to sell lest it run afoul of Washington’s sanctions edict.
