Barrels From the Backyard

Will more Venezuelan crude boost the tanker market?

Western sanctions on Russia are tightening.  Earlier this week, the U.S. President announced a ban on oil, gas, and coal imports from Russia.  While U.S. imports of Russian crude oil and petroleum products are relatively limited, Russian exports have already been hit by “self-sanctioning” from many Western oil companies and traders.  As a result, an already tight global oil market has become even tighter and oil prices are closing in on record highs.

This has led to a global search for additional oil supplies.  A coordinated release of 60 million barrels of crude oil from strategic petroleum reserves has had a very limited impact.  The U.S. government has asked OPEC to produce and export more (no success so far), is hoping to strike a deal with Iran, and is urging domestic shale producers to grow domestic output.  The “all of the above” approach has also led to preliminary discussions between two long-time adversaries, the U.S. and Venezuela.

In this Opinion, we will discuss the potential implications for the tanker market if the U.S. eases the oil sanctions on Venezuela.

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