(Bloomberg) — Venezuelan crude inventories have surged 84% over the last three weeks as the threat of U.S. sanctions ward away buyers of the nation’s most important commodity. That raises the risk that state-run PDVSA will have to start shutting in production again, and is the latest sign that Venezuela’s oil industry is on the verge of collapse.
The port of Jose, the main gateway of the country’s oil exports, has been empty for a week as importers of Venezuelan crude including India’s Reliance Industries Ltd, Spain’s Repsol SA and Italy’s Eni SpA skipped oil purchases this month, according to internal reports seen by Bloomberg. The three companies last month took a combined 9.7 million barrels, accounting for more than half of September’s exports.
Oil stored at the Jose terminal and nearby facilities known as upgraders almost doubled to 10.6 million barrels since the end of September, reversing a 3-month decline. At these levels inventories are dangerously close to volumes that in the past have prompted the state oil company Petroleos de Venezuela SA to shut-in wells because it didn’t have anywhere else to store its crude.
While U.S. sanctions have crippled Venezuela’s oil export trade, so-called crude-for-diesel swaps between PDVSA and Asian and European refiners were permitted for humanitarian reasons. The Trump administration was reported in August to be considering additional measures to cut off these remaining fuel transactions. Last month, Reliance bought 12 million barrels of Canadian oil, possibly a precursor to a more permanent shift away from Venezuela.
The Trump administration is zeroing in on the diesel swaps because it’s running out of options to pressure the regime of President Nicolas Maduro. Just last month, an influential Trump administration official secretly met with a representative of Nicolas Maduro’s regime in Mexico City to try to negotiate the Venezuelan leader’s peaceful exit from power.
The last time an oil tanker loaded at the Jose terminal was on Oct. 16, according to ship-tracking data. There are no other vessels scheduled for the rest of the month, preliminary reports seen by Bloomberg show. That’s a sharp contrast from 3 years ago, when the terminal was loading one vessel every 17 hours.
With the big European and Indian refiners sitting out of the Venezuelan market, little-known companies including Retino Maritime, Kalinin Business, Xiamen Logistic Grass and Wanneng Munay have taken over, the internal reports show. Together they loaded so far 4.6 million barrels of oil, a far cry from September, when loadings totaled 17.4 million barrels.
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