Venezuela-US oil trade continues to grow

US imports of Venezuelan oil have seen two periods of steep growth since the Biden administration started issuing exceptions to economic sanctions. In early 2023, we saw an increase with Chevron’s resumption of operations. We are witnessing a new rise this spring. EIA data for January 2023 to March 2024, Reuters for April and May 2024.

The US Energy Information Administration shows that oil imports from Venezuela have increased this year, reaching 180,000 barrels per day in March. That month, the South American country rose to become the sixth source of crude imports in the US, and seventh for all oil products.

Numbers compiled by Reuters, using PDVSA and LSEG shipping data, show that US oil imports from Venezuela continued to grow, to 238,000 b/d in April and 205,000 b/d in May. General License 44, which allowed for US citizens to buy Venezuelan oil, ended on 18 April. However, a wind-down period lasted until 31 May. 

US-bound exports were zero from June 2019 to January 2023, when Chevron’s license—GL 41—to take shipments of oil became active. GL 44, which lasted for six months, did not show an impact on this direction of trade until April.

Instead, many traders used the opportunity to sell into other countries in Latin America and the Caribbean, Europe, and Asia. Global trading houses are either based in the US or are exposed to its financial system, which resulted in shunning Venezuelan crude shipments even if they were not for North American consumers. Fear of secondary sanctions is also why companies headquartered in the aforementioned regions are seeking specific licenses from the OFAC.

Whether production and exports continue to grow in the coming months will be largely up to the OFAC. Furthermore, which companies are given a specific license will be relevant, as they are more likely to ship oil to their home regions.

In March, Venezuela became the seventh-largest source of all oil products in the US, as well as the sixth if we only consider crude. EIA data.

Can we go back to pre-sanctions levels?

This year’s figures are still a small fraction of volumes before the OFAC ban. In 2018, already during a drop of production and under financial sanctions on PDVSA, the average was 586,000 b/d. In the 1990s and 2000s, the US consistently absorbed an average above 1 Mb/d. By the 2010s, the number fell both due to the drop in Venezuelan output and the increase in extraction in North America. 

In a report, the EIA argues that in the last decade, the US came to import more from Canada while simultaneously ramping up output, thanks to the shale revolution. The share of OPEC imports fell in this period against alternative producers, and in 2020 the US became a net oil exporter.

The US remains a prominent buyer, especially due to its large refining industry. In 2023, the country still brought in 8.51 Mb/d of petroleum products, even if this was offset by exporting 10.15 Mb/d.

Beyond restrictions on the purchase of oil, there remains the fact that output has risen slowly since January 2023. The increase would be about 700,000 b/d to 900,000 b/d according to PDVSA and 800,000 b/d to the OPEC’s database drawing from secondary sources—updated figures for both will be published later this month.

And US oil exports to Venezuela!

Trade in the other direction, that is the export of US oil products to Venezuela, was clearly affected by GL 41 and GL 44, again according to the EIA. These exports include condensates used to blend or refine crude and finished products like car fuel. 2019 sanctions brought them to negligible numbers, though they returned with Chevron’s license to over 400,000 barrels monthly.

In October 2023, the US exported 460,000 barrels to Venezuela, rising to 1.1 million in November—as GL 44 came into effect—and 2.9 million in January 2024. The figure has since fallen to 1.5 million barrels in March, likely due to uncertainty over the end of GL 44.

Before sanctions, US oil exports bound for Venezuela were on the rise, especially in the last two decades. In 2018, they peaked at 45.1 million barrels for the year. This was due to the growing prominence of the Orinoco Belt and its heavy and extra-heavy crude.