Venezuela Is Facing A Crisis – Who Will Buy Its Oil Now?

Venezuela Is Facing A Crisis – Who Will Buy Its Oil Now?

Venezuela is having a hard time selling heavy crude oil due to sanctions from the US

Oil controls the country’s economy in Venezuela, but over the past decade, oil production has collapsed and the country’s in deep economic crisis. The country’s biggest customers used to be the US, India, and China, but due to recent sanctions by the US, more than eight million barrels of crude oil is sitting in tankers. The crude oil belongs to PDVSA and to its partners in production joint ventures: Chevron, Valero Energy, and Rosneft.

The sanctions in question stop US companies from doing business with Venezuela’s state company, PDVSA. These sanctions came into effect in order to prohibit President Maduro’s government from selling the oil, whom the US and more than 20 countries would like to see out of the office, since they have already recognized opposition leader Juan Guaidó as interim president.

Through these sanctions they want to prevent Mr Maduro’s government from taking funds from the state oil company. However, the measures do not cut off imports entirely, they require payments to be made into accounts that the oil company cannot access. On the other hand, sanctions have also impacted the access to the chemicals required to process the oil. He is also accused of human rights abuses and rigging elections, National Security Adviser John Bolton said:

“We have continued to expose the corruption of Maduro and his cronies and today’s action ensures they can no longer loot the assets of the Venezuelan people.”

However, the people of Venezuela are the ones suffering now since the country is going through a crisis due to the fact it is heavily reliant on the US for selling 41% of its oil, remaining in its turn, the top four crude oil suppliers to the US. Moreover, the government has devalued the bolivar by almost 35% in order to align it with the black market exchange rate.

The oil now sitting in more than 8 million barrels off the Venezuelan coast were originally destined for the United States but now cannot be sold due to the sanctions. The Maduro government wanted to double shipments to India, its second-largest customer after the United States. But even if that happens, cash sales will still be affected.