In a recent development, US Secretary of State Marco Rubio has outlined a strategic plan to revive Venezuela's oil trade, a move that could significantly impact the tanker business in the post-Maduro era. While the short-term prospects look promising, Rubio candidly acknowledges that there are no guarantees. He emphasizes, 'I'm not making rosy projections on oil.'
At a Senate Foreign Relations Committee hearing, Rubio detailed America's strategy for Venezuela's crude exports. He revealed that the interim plan involves partnering with trading houses Trafigura and Vitol to sell sanctioned oil. This partnership is a temporary solution to address the urgent need for cash to prevent a collapse in Venezuela. Rubio explained, 'The only reason we’re using Trafigura and Vitol is short term. We had to move 50 million barrels that were stuck and Venezuela needed to turn that into cash to avert a collapse.'
According to Vortexa, US-licensed moves of sanctioned oil are already boosting tanker activity. The US has authorized 12 crude liftings from Venezuela to the US aboard 10 tankers, totaling 7 million barrels, and an additional 6 million barrels of Venezuelan crude are being discharged to Caribbean storage hubs. Nine licensed tankers are currently ballasting towards Venezuela.
The long-term vision, however, is more ambitious. Rubio stated, 'I’m not here to claim it’s going to be easy. We’re dealing with people who have spent most of their lives living in a gangsters’ paradise.' The ultimate goal is to transition to a normalized oil trade, but this will require addressing the challenges posed by Venezuela's oil industry.
Rubio highlighted the involvement of the two trading houses as a necessity, not a permanent solution. He added, 'Here’s the problem we faced. In the short term, Venezuela had no place to put the oil. They were running out of storage capacity.' The US is also concerned about the Venezuelan government running out of money, which could lead to societal collapse. Funds from sanctioned oil sales will be used to meet the immediate needs of the Venezuelan people, including funding for police officers and sanitation workers.
The funds from sanctioned oil sales are being held in a Qatar account for now, with the ultimate destination being a blocked US Treasury account. Rubio assured that the US will outline what the money can be spent on, with a budget request and audit process to ensure transparency. The initial funds of $500 million from sanctioned oil sales have already been disbursed to the Venezuelan government to cover payroll.
Rubio also addressed the shadow fleet activity involving Venezuela, stating that since Maduro's removal, no illegal ships have headed towards Venezuela. The new Venezuelan government has cooperated with the US to stop outbound voyages, and the US has seized several ships, either with court orders or as flagless vessels in the shadow fleet. The goal is to channel all illegal oil into an account benefiting the Venezuelan people.
Looking ahead, Rubio emphasized the need for a period of recovery and normalization of the oil industry. The long-term plan is not to rely on the two trading companies. Instead, the focus is on creating a normal energy program that sells directly into the market, with the US 'out of the game.' Rubio acknowledged the challenges, stating that companies will only invest in Venezuela if they know they will make a profit and their land won't be taken from them. The US will not financially support energy companies' investments in Venezuela, aiming instead to restore the country to a normal, prosperous state.
