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Home / Business / America did not import oil from Venezuela last week. Here's why it's a big deal

America did not import oil from Venezuela last week. Here's why it's a big deal



It marks a sharp decline from last week, when the US imported 112,000 barrels a day from Venezuela. The halt in oil shipments from Venezuela helped lift US oil prices over $ 60 a barrel this week for the first time since November.
But US Gulf Sky refineries have long been on Venezuelan's major crude oil to get rid of gasoline, jet fuel and diesel that keep the US economy engrossed. Just a year ago, Venezuela sent more than half a million barrels of oil per day to US shores, making the Latin American country one of America's largest suppliers.

"I suspect it will keep to zero. It's a big problem for US refineries," says Ryan Fitzmaurice, energy strategist at Rabobank. "We really need the heavy raw material coming from Venezuela. We find it difficult to source it from elsewhere. "

Add to the misery of Venezuela

The United States has never gone a whole month without importing oil from Venezuela since EIA began measuring these monthly data in 1973.

While sanctions were imposed in January, Fitzmaurice said that some shipments from Venezuela continued to arrive in recent weeks due to the mildness of US officials and the fact that the raw material was already on ships off the Gulf Coast.

Cutting from the US adds misery For the United States, a humanitarian catastrophe characterized by hunger, lack of medicine and mass disorder is being seized by the nation.

Prior to the sanctions, the United States was Venezuela's No. 1 oil customer, and the Venezuelan government used oil exports for 90% of its turnover. 19659009] Years of under-investment from the country has led to Venezuela's oil production falling sharply, but that situation has been exacerbated by the recent chaos and a Merican sanctions.

"Venezuela has long been a problem for the oil market," said Michael Tran, director of global energy strategy at RBC Capital Markets.

Saudi shipments down 37%

The suspension of oil shipments from Venezuela contributes to the upward pressure on US oil prices have increased 40% since Christmas Eve and petrol prices are crawling higher.

Much of the troubled tip was due to OPEC and its allies agreeing last year to grind production in an attempt to uplift a supply liquor. Having thrown into a bear market last year, crude oil has been on fire in 2019.

Saudi Arabia, the king of OPEC, has sharply cut oil products to the US The goal is to convince oilmakers and analysts that it really is to melt back on production And the United States has the most timely and accurate inventory data.

  America is set to overtake Saudi Arabia in a remarkable "oil milestone" l

US oil imports from Saudi Arabia have fallen by 37% over the past year to 407,000 barrels per day, according to the EIA. And they are down by 68% from two years ago.

"The Saudis are specifically aimed at the United States," said Fitzmaurice.

The good news for the United States is that it pumps tons of oil at home. Powered by the slate revolution, US production has risen to record heights. In fact, the United States is now the world's leading oil producer.

Canada, Mexico has its own problems

The bad news is that US refineries cannot rely on American shale oil alone. That's because not every barrel is raw equal. While US shale oil is a high quality light quality, the decade-old Gulf Coast refinery is set to run on a healthy dose of lower quality heavy crude oil, as is abundant in Venezuela.

"When it comes to real heavy stuff, we really don't," said Fitzmaurice.

Normally, the United States could turn to Canada for heavy crude oil. But Canada has run out of pipelines used to transport raw to its southern neighbor, limiting production.

"Canada is maxed out," said RBCs Tran.

Mexico also produces heavy crude oil. But Mexico's oil production has been in steady decline for many years.

The situation has caused a strange phenomenon, where heavy crude oil is traded in pairs or even at a premium to light crude oil.

"Why would you pay more for something that is lower quality? Because it gets harder and harder to find the heavy crucibles," Tran said.


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