PDVSA's El Palito refinery is seen in Puerto Cabello, 150 miles (241 km) west of Caracas, September 23, 2009. The banner reads: "Venezuela now belongs to all". REUTERS/Edwin Montilva
WSJ: Venezuela’s Brewing Oil Shock May Be Bigger Than Iran’s
Two threats could further disrupt Venezuelan exports, possibly taking as much crude off the market as the renewal of Iran sanctions
The oil headlines this week have all been about Iran, but the slowly unfolding disaster in Venezuela may be even more significant.
Less than two weeks before a controversial snap presidential election that would almost certainly give incumbent Nicolás Maduro a six-year term, the country’s main source of export revenue could take another drastic tumble. S&P Global Platts estimates the country’s recent crude production was 1.41 million barrels a day, at least a 30-year low except for a crippling 2002-2003 strike. And over half a million barrels below what it was a year ago.
Venezuela faces two risks that, if both come to pass, could cut its oil output by more than the biggest estimates of what could happen to Iran if sanctions were reimposed. The risks stem from Venezuela’s dependence on importing lighter varieties of crude to mix with the heavy oil it produces, and its need for products imported from the U.S. to enable its thick oil to be transported.
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WNU Editor: I am surprised that the U.S. has not halted diluent exports to Venezuela. It is a critical product that is needed when it comes to transporting thick oil, and half of Venezuela's oil exports could be impacted by not having it. My guess is that this is the last tool that the U.S. will use when it comes to finally imposing comprehensive sanctions against the Maduro regime.
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WNU Editor; Agreed, no need to stick the last nail in the coffin for Venezuela. So sorry to see that Country implode, will take a coup to change things. Doubt the International community will step in; but, we'll see.
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