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    Storage tanks stand in a PDVSA state-run oil company crude oil complex near El Tigre, a town located within Venezuela's Hugo Chavez oil belt, formally known as the Orinoco Belt

    Only US Refineries to Be Hit by Sanctions on Venezuelan Oil Firm - Energy Expert

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    The US blocked $7 billion in Venezuelan state oil company PDVSA's assets in its jurisdiction. Sputnik has discussed the new US sanctions with Dr Cyril Widdershoven, a veteran global energy market expert who holds several advisory positions with international think tanks in the Middle East and energy sectors in the Netherlands, the UK, and the US.

    Sputnik:  How could the brewing crisis in Venezuela and potential power shift affect the country’s position on the oil market and in OPEC?

    Dr Cyril Widdershoven: When looking at the oil market, the real effects of a potential implosion of the Maduro regime [Venezuelan government], will not be very large. Already, most of Venezuela’s oil production is down, only now being able to produce 800,000-1.2 million bpd.

    Also, most of the heavy crude of the country doesn't have a lot of clients anymore, so only US refineries will be hit, but this has been taken into account already. For the foreseeable future, the oil market implosion of Venezuela could even a blessing in disguise, as it opens up more effective measures to counter a potential oil glut, as US shale is still growing.

    For OPEC, the situation could be different. Venezuela is still a hardliner within the cartel, supporting Iran. Looking at the demise of the country’s production, its overall impact on the cartel will be very low. The latter situation will give more room for Saudi Arabia, UAE, Kuwait and Bahrain, to step up their coordination with Russia and other non-OPEC members. It also will weaken the position of Iran, as no more real support within the cartel is available.

    READ MORE: Venezuelan FM Says US Sanctions Expose Oil as Purpose of Coup Attempt

    Russia could also change sides very soon, taking the point of view that cooperation with Saudi Arabia, UAE, is more important than hanging on to a lame duck and Iran.

    Sputnik: Experts say that China and India could actually profit from the US-imposed sanctions on PDVSA. How is that?

    Dr Cyril Widdershoven:  Potentially, China and India could profit, as their refinery sector is well equipped to deal with heavy oil. Venezuelan oil production is mainly heavy oil, formerly going to the US, but now available on the market against very low price levels. Both countries could take the opportunity to acquire the existing volumes to even integrate US shale oil to blend it at their refineries.

    However, this will only be for the short term, as both will need to look at the US and EU, even to Arab countries, to deal with the potential fallout of supporting the Maduro regime [Caracas authorities].

    The views and opinions expressed in this article are solely those of the speaker and do not necessarily reflect Sputnik's opinion.

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    Tags:
    Oil, sanctions, OPEC, PDVSA, United States, Venezuela
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