Venezuela: between political crisis and oil flowsTags: Venezuela, Venezuela sanctions
Venezuela’s political and economic crises continue to deteriorate, all while PdVSA tries to maintain steady oil flows.
On Tuesday, opposition leader Juan Guaido, accompanied by several members of the Venezuelan armed forces, called for military support to oust Nicolas Maduro. Nevertheless, military forces remained loyal to Maduro, though civilians took to the streets in an effort to change their mentality.
Despite political unrest, Venezuela still loaded a handful of vessels during those tense days. The South American OPEC member was able to keep oil loadings close to 900,000 bpd in April, the highest since US sanctions were imposed on PdVSA on January 28.
Following Tuesday’s events, the opposition is now relying on social unrest to keep the pressure on Maduro and his military supporters. Failing to fracture the loyalty of the armed forces will leave the opposition with few options to change the government in Venezuela.
Caracas now faces new economic challenges in the form of US sanctions imposed Sunday that restrict the use of the US financial system to purchase oil from PdVSA. This will affect the country’s finances as Venezuela is forced to look for new buyers for its oil and new ways to sell it.
European clients are likely to halt imports of Venezuelan oil after the sanctions. This will be a major blow for the South American country as European markets imported 70,000 bpd of its oil since the beginning of the year, making Venezuela one of the main sources of heavy crude in the continent.
Less exposed to unilateral US sanctions than European countries, China could be the big winner from May on by taking in more Venezuelan oil. So far this year, China imported crude oil at a pace of around 348,000 bpd making the South American country a top source of heavy crude oil for Beijing.
As US sanctions squeeze the Venezuelan economy, the political conflict is expected to escalate following this week’s events.
About The Author
Amir Richani is a geopolitical analyst focused on Latin America. His research focus is on political, economic and social developments that could have an impact on global flows. Amir holds a BA in political studies from the American University of Beirut. He was the lead analyst at Eqlim prior to joining ClipperData.