Commodity market News |Venezuela: The New ‘Middle East’?

Commodity market News |Venezuela: The New 'Middle East'?

In the latest commodity market news, the removal of US sanctions from Venezuela has made it a hotspot in the global crude oil game.

Global energy traders are emerging as early buyers of Venezuela’s stocks of crude oil following last week’s easing of the US energy sanction, according to people familiar with the field.

Venezuela was an area in the global market which was placed under US sanctions in 2019 and has been largely blocked by state-run oil companies PDVSA from exporting to the chosen market.

However, it all changed overnight, as last week’s announcement gave ease to Venezuela as we as crude oil prices on a global scale. However, as per experts, Washington’s 6-month relaxation of the measure is too limited to propel new crude production.

Oil Refining Firms Seeking Oil from Venezuela:

It’s no surprise that major oil players would jump to the opportunity to buy oil from Venezuela as it may just flip the crude oil price game in their favour.

US, European and Asian refining firms including the likes of Reliance Industries, Tipco Asphalt, Valero Energy, PBF Energy and Eni are in talks with PDVSA to resume or expand imports of Venezuelan crude oil.

As per reports coming from Reuters, Valero, Reliance and Tipco did not respond to any comments, however, a PBF spokesperson said that the company does not comment on activities that it considers business confidential.

However, Eni expects that the sanction easing would allow the oil major ” to increase the flexibility and effectiveness of debt collection activities” through oil-for-debt swaps in place since last year, one of the spokespersons said last week.

As per the latest commodity market news Spain’s Repsol has been in negotiations with PDVSA for months to expand gas output in Venezuela. Alongside them, Eni also hopes to ramp up oil production and resume sales of popular crude-grade Corocoro, which used to be exported to the United States.

Essentials of the new crude specifications:

As the dynamic of the crude oil market shifts, gaining clearance from buyers’ legal and compliance departments and renegotiating prices would require a substantial amount of work.

As per the recent commodity market news, several companies have recently appealed to the US Treasury Department for guidance on potential deals. Traders are on the lookout to capture spot cargoes facing a long-standing unwillingness by vessel owners to load in Venezuela that elevated freight tariffs and imposed a special contract clause for “war zones”.

In another interesting piece of information, the crude quality problems incoming from PDVSA’s deteriorated infrastructure would be quite difficult to solve and could continue forcing price discounts, many sources informed.

Future Outlook from Commodity Samachar:

The market dynamics are shifting concerning crude oil and here’s what Ankit Kapoor, Head of Research at Commodity Samachar has to say about the situation. ” The US has created a situation wherein the deal with Venezuela has put pressure on Saudi Arabian and Russian oil cuts that were going to continue till the end of the year. As we’ve discussed in our previous week’s Weekly Samachar, USA has cleverly managed to turn things in their favour by easing the sanctions on Venezuela.

However, this deal will serve as a temporary relief for crude oil prices as the US will try to reach their target of $79 for crude oil before the 2024 election. Amid the Israel- Hamas war scenario, this deal comes as a relief for crude oil companies however if the war rages on, the crude oil prices might experience spikes. We’ll have to wait to see what’s in store for the future of crude oil”

Commodity Samachar
Learn and Trade with Ease

Also Read: Crude Oil News | US Crude Drops 5%, Inventory data is anticipated, Commodity Market News | BOC and US Home Sales take centre stage. Will this be the agenda today?

Recommended Read: Israel-Palestine Crisis: Exploring Its Effects on India’s Economic Landscape