Impact of a U.S. Oil Embargo on Venezuela and the Global Market

For months, industry analysts have discussed a potential, and for some, imminent, U.S. oil embargo on Venezuela. The issue has resonated in the press since former U.S. Secretary of State Rex Tillerson’s February 2018 Latin America and Caribbean tour.

Press reports suggest that the U.S. government is considering various approaches. A ban could be applied to oil exports to the U.S., imports from the U.S., oil shipping, or insurance for tankers and cargoes. A combination of these options could be prohibited on a step-by-step basis, or all at once.

The Financial Times argued that an oil embargo would be “the headshot” to the Maduro regime. Atlantic Council analysts have suggested that an oil ban would result in significant costs, not only for Venezuela and PDVSA, but also for U.S. Gulf Coast (USGC) refineries. They suggest that gasoline prices in the U.S. could surge, and that it would take months and significant investment for U.S. refiners to change crude slates. Concern over refining margins and potential industry layoffs has also been voiced.

The Venezuelan government claims that, if the U.S. were to order an embargo, PDVSA would sell its oil to other markets. Some assert that an arbitrage opportunity for traders would be created, allowing them to profit from reselling or swapping Venezuelan oil with countries like Syria, China, and/or Russia.

This report explores the speculation and the realities to uncover the mechanics and impact of an embargo on Venezuela and the global markets.  While an embargo may be doable for the U.S. and pose minimal impact on global crude markets, the overall effect may not be what the U.S., or Venezuela’s neighbors in the region seek.

The full report can be purchased at the link below.  Press, please contact IPD for further information.

Contents

Introduction       2

The Iranian Oil Embargo: Comparative Analysis     2

Embargo Impacts             4

Crude and Petroleum Product Exports to the U.S.   5
Heavy Oil Exports to the USGC     6
Imports from the U.S.     6
Domestic Transport and Power Sector      7
PDVSA Shipping Operations           7
Caribbean Storage Facilities          9
Mixed Companies (JVs)   9
USGC Refineries 10
U.S. Refining Technical Challenges             12
Refining Margins and Replacement Options           13
U.S. Gasoline Prices         16
PDVSA’s Mitigation Options          16
Increased Exports to India             17
Increased Exports to China           17

Conclusion: What an Embargo Means for Politics 18

File Type: PDF
Report Date: April 13, 2018
Price: US$ 850.00

This project is compliant with IPD Latin Amercia’s insider trading and MNPI policies.
© 2018, IPD Latin America.