Tuesday, June 22, 2021

Venezuela breaks US blockade, resuming direct oil shipments to China

President-elect Joe Biden's advisers have said he would retain sanctions but shift the focus of US strategy.

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Venezuela has resumed direct shipments of oil to China after US sanctions sent the trade underground for more than a year, Reuters reports.

Chinese state companies China National Petroleum Corp and PetroChina, longtime top customers of state company Petroleos de Venezuela (PDVSA), stopped loading crude and fuel at Venezuelan ports in August 2019 after Washington extended its sanctions on PDVSA to include any companies trading with the Venezuelan state firm.

Imposition of the sanctions was part of a push by the Trump administration to oust Venezuelan President Nicolas Maduro, but they failed to completely halt the South American nation’s oil exports or to loosen Maduro’s grip on power.

PDVSA’s customers instead boosted shipments to Malaysia, where transfers of cargoes between vessels at sea have allowed most of Venezuela’s crude to continue flowing to China after changing hands and using trade intermediaries.

A US Treasury Department spokesperson said on Wednesday that “those engaged in activity in the Venezuelan oil sector risk exposure to sanctions”.

Earlier this year the US went after shipping firms that continued to do business with Venezuela. The resumption of direct imports may signal that China expects new policies from Washington after the presidential handover.

The direct shipments from Venezuela come ahead of January’s transition of power in the US from President Donald Trump to president-elect Joe Biden, whose advisers have said he would retain sanctions but shift the focus of US strategy.

The US State Department had no comment about the resumption of direct oil trade between Venezuela and China, says Reuters.

China has joined Venezuela’s other close allies – Russia and Cuba – in publicly criticising sanctions on Opec-member Venezuela.

Maduro’s government met with a delegation of Chinese officials and businessmen this month to tout a new law to promote investment despite what Caracas has called the “blockade” by Washington. The law allows the government to sign new oil deals confidentially.

Maduro said during the meeting he would send a letter to China’s President Xi Jinping encouraging more robust commercial relations between the two countries.

Maduro said, “We have to move forward with investments, with wealth creation, with new partnerships. The new anti-blockade law allows all that. Let’s do it in this new phase.”

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