Effective immediately, the actions prevent companies from entering into financial transactions with PDVSA, any purchase of Venezuelan oil by US entities would flow into blocked accounts to be released only to the legitimate leaders of Venezuela. The US, Canada, Brazil, Columbia and a group of major European countries, have recognised Juan Guaido as interim leader, urging him to hold fair and free elections following a controversial poll in May which saw socialist Nicholas Maduro re-elected.
Although the sanctions will undoubtedly have a negative effect on Venezuelan oil trades and to global oil supply, the measures could prove beneficial to the tanker sector by increasing tonne mile demand. Until the sanctions were put in place, the main destination of Venezuelan crude was to US refineries but it is now likely that we will see more volumes of crude going to India and China who are both major importers of Venezuelan crude.
US refineries, who up until the sanctions were put in place, were importing 500,000 barrels/per day from Venezuela, according to US energy department data, will instead have to consider substituting Venezuelan crude with imports from Canada, Mexico and the Middle East.
In addition to adding barriers that make it harder for Venezuela to export oil, the sanctions also make more difficult and more expensive for the US to send fuel products in the other direction. Naphtha produced at US refineries will is exported to Venezuela to dilute the domestic crude which is heavy and sour so that it can pass through the pipelines. If Venezuela does not get Naphtha from the US it will likely be forced to source naphtha from Europe and Russia which will not only be more expensive but also difficult as European traders and oil companies will struggle to supply Venezuela with naphtha as the sanctions will scare companies from dealing with PDVSA.
Meanwhile the sanctions are causing delays for tankers, with reports that there are up to 7 million barrels of Venezuelan crude in tankers with no destination, idling either off the coast of Venezuela or elsewhere in the Caribbean and Gulf of Mexico without a contingency plan.