The Impact of Venezuela Sanctions on US Refiners
Venezuelan sanctions are unlikely to have a significant impact on US refiners, according to the US Energy Information Administration (EIA).
In an analysis piece published on the EIA’s website on the 6th February, the organisation said the recently announced sanctions “will essentially eliminate US imports of Venezuelan crude oil as the full effects of the sanctions emerge”. The organisation added, however, that it “does not anticipate any significant decrease in US refinery runs as a result of these sanctions”.
US imports of Venezuelan crude oil have been falling for several years and refineries have been replacing Venezuelan crude oil with other heavy crude oils, according to the EIA.
Moving forward, refineries may also choose to run lighter crude oils because transportation constraints may limit the availability of heavy crude oils, the EIA highlighted in the analysis.
The EIA said refiners with significant asphalt and road oils processing unit capacity may have a harder time finding adequate replacements but added that these refineries have also limited imports from Venezuela recently.
In a statement at the end of January, Rystad Energy Analyst Paola Rodriguez-Masiu warned that the sanctions will affect refinery margins in the United States and said US refiners “will be amongst the biggest losers”.
In the statement, Ms Rodriguez-Masiu also said the sanctions “will deal a meaningful blow to the Maduro administration’s cashflow” but stated that the effects “will not be as harsh as the United States expects”
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“Administration officials reportedly said the sanctions would result in more than US$11 billion in export losses for Venezuela over the next year, but I believe this figure will be substantially lower,” Ms Rodriguez-Masiu said in the statement.
“The oil Venezuela currently exports to the United States will be diverted to other countries and sold at lower prices. For countries like China and India … the news was akin to Black Monday. They will be able to pick up these oil volumes at great discounts,” the Rystad Energy analyst added.
Mr Maduro branded US sanctions “illegal, criminal and immoral” in a statement posted on his official Twitter page, which was translated.
The EIA is the statistical and analytical agency within the US Department of Energy. It collects, analyses, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets and public understanding of energy and its interaction with the economy and the environment, according to the EIA’s website.
The Department of Energy Organization Act of 1977 established the EIA as the primary federal government authority on energy statistics and analysis.
Source: Rigzone