US orders foreign firms to further cut oil trade with Venezuela regardless of sanctions – report

Washington has demanded non-US oil trading houses and refiners cut operations with Venezuela beyond the already imposed sanctions or face sanctions themselves, according to a Reuters report.

The US State Department told foreign firms that the already existing restrictions on the South American nation are actually wider than on paper, the agency said on Thursday, citing three sources familiar with the matter. The demands reportedly covered any direct, indirect or barter oil trade with Caracas and those who refuse to comply with the demands may face sanctions themselves.

While some companies, including ones from European states, Russia and India, continue to deal with Caracas, an official said that the firms should be aware of “the possible risks they face by conducting business” with sanctions-hit Venezuelan state-run oil major PDVSA.

“This is how the United States operates these days. They have written rules, and then they call you to explain that there are also unwritten rules that they want you to follow,” Reuters cited one of its sources as saying.

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The Trump administration slapped Venezuela’s oil industry with sanctions in January, as US-supported opposition leader Juan Guaido declared himself interim president. In particular, the US froze $7 billion of assets belonging to PDVSA and its US subsidiary Citgo.

The US now wants to cut supplies of gasoline and oil products used to dilute heavy Venezuelan crude to make it suitable for export. Diesel and jet fuel are exempted from the measures due to “humanitarian reasons,” according to a Reuters source.

The oil sector is crucial for Venezuela’s economy as it accounts for most of the country’s revenues. US sanctions have already taken a toll on the country’s crude oil and fuel exports. February crude shipments sank 40 percent to 920,000 barrels per day (bpd), according to data from PDVSA and Refinitiv Eikon.

Earlier this month, Venezuela’s oil minister and president of state-run oil company PDVSA, Manuel Quevedo, said that Caracas may divert oil originally bound for the US to Russia and China.

Quevedo is set to meet with Russian Energy Minister Alexander Novak next week. During the meeting, the ministers will discuss ways to increase Venezuelan oil exports to Russia among other issues, Novak told journalists on Friday.

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