Report:

US Sanctions on Venezuela, Iran Cause Heavy Oil Shortage in Market

TEHRAN (defapress) - US sanctions on Venezuela and Iran, together with OPEC’s output cuts, have removed mostly medium and heavy oils from the market.

News ID: 75574

Date: 13 February 2019 - 11:52

The US sanctions on Venezuela’s state-owned oil company are tightening the global oil market and sending refiners around the world scrambling to find replacements for the country’s diesel-rich heavy and extra heavy crudes, according to a report by Reuters.

Venezuela’s heavy crudes, such as Merey, have few close substitutes, with the nearest being grades such as Brazil’s Marlim, Mexico’s Maya, Canada’s Bow River and Cold Lake, or Iraq’s Basra Heavy.

Most of those crudes have an even higher sulphur content than Venezuela’s, which will require extra processing to make fuels of acceptable quality, and in any event the quantities are limited in the short term.

Venezuela sanctions have arrived in a market that was already likely to be short of medium and heavy crudes because of US sanctions on Iran and OPEC’s output cuts.

The major oil exporters in the Middle East (Saudi Arabia, Iraq, United Arab Emirates, Kuwait and Iran) market mostly medium and heavy crudes.

US sanctions on Iran and Venezuela, together with OPEC’s output cuts, have therefore removed mostly medium and heavy oils from the market, leaving lighter grades relatively unaffected.

The result is that prices of medium and heavy crudes have surged relative to their lighter counterparts since the middle of January.

Venezuela has the world’s largest proven oil reserves, amounting to around 300 billion barrels, ahead of Saudi Arabia on 265 billion and Canada at 170 billion.

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