Whilst fear of US sanctions still appears to be serving as a deterrent to international oil companies doing business with both Iran and Venezuela, the two countries are reportedly finding ways of helping each other resolve their oil-related problems associated with the sanctions imposed by the United States.
Towards the end of the Trump administration, Tehran emerged as a proverbial life-saver for Caracas, delivering oil to the South American republic in the teeth of a risk that their vessels could find confrontation in waters which Washington regards as part of its proverbial ‘backyard’.
The passage of time would appear to have realised a further consolidation of the relationship as these days, Venezuela is reportedly shipping jet fuel to Iran in the same vessels in which Iran delivers gasoline and spare parts for refineries in Venezuela. A recent Reuters report indicates that Caracas, which reportedly has excess aviation fuel, is only too happy to send some Iran’s way in exchange for gasoline which, from all reports, has now become ‘good gold’ in the country that once boasted of offering its citizens the cheapest gasoline anywhere in the world. Venezuela has been suffering from acute gasoline shortages in recent years as a result of US sanctions, which have cut off imports.
Venezuela’s possession of the world’s largest crude oil reserves counts for little these days in circumstances where the refining capabilities of its state-run oil company PDVSA have been compromised reportedly on account of run-down infrastructure and where US action has limited the number of shipping companies that are prepared to move the country’s crude oil to markets abroad.
Washington’s squeeze of Venezuelan oil exports, a form of pressure that targets the removal of the administration of President Nicolas Maduro from office has realised a significant measure of success in pressuring shipping international shipping companies into not handling Venezuelan crude oil, the lifeline of the country’s earnings.
While the tension associated with the Venezuela/Iran collaboration may have been significantly lowered with the disappearance of Trump from the US political spotlight, the old animosity between Washington and Tehran remains a potential powder keg in circumstances where the latter continues to ignore the US sanctions imposed on Venezuela. In August last year the US made public what it said had been its seizure of fuel cargo from four vessels reportedly on their way to Venezuela from Iran. The US subsequently reported that it had sold the seized oil.
