Venezuela’s temporary return to above-board oil trading will have a muted impact on tanker markets, analysts said on Friday.
The country’s deal with the US to lift sanctions in exchange for electoral reforms would not have a big impact on tankers initially, ABG Sundal Collier’s Petter Haugen said, as it will take time to ramp up exports.
“The first increases in production would likely be refined and perhaps also consumed within the country, and hence the impact on the tanker markets, either product or crude, would likely not be imminently felt,” he said.
Haugen said Venezuela produced 2.9m barrels per day (bpd) of crude oil in 2015, but cratered to 700,000 bpd by 2022 due to mismanagement.
“From our understanding, it will likely take years before the [approximately] 3m bpd levels could be seen again,” he said.
“But qualitatively, the impact from higher Venezuelan oil production is positive for the tanker market as it would likely imply higher exports from the Atlantic basin.”
Some of those barrels could head to the US, replacing high-quality US crude, which could be available for export, Haugen added.
Fearnleys analyst Oystein Vaagen said the deal allows the US and Europe to muscle in on what had been shadow trading, in which most barrels headed to China.
“While it means overall lower tonne-time tanker demand, more volumes will benefit the ‘normal’ tanker fleet, [suezmax and aframax] in particular,” he said.
The deal between Washington and Caracas is initially for six months.
In exchange for lifting sanctions, Venezuelan President Nicolas Maduro agreed to changes to the country’s elections, which have previously been beset by claims of fraud.
Venezuela also made commitments with respect to wrongly detained individuals, White House officials said.
If the country abides by the deal, the sanctions will stay off for good, officials said.
Venezuela had been under sanctions since 2017, with former US President Donald Trump seeking to cut off its oil exports.
His replacement in the Oval Office, Joe Biden, has been trying to increase global crude supplies since much of the developed world levied sanctions on Russia and its oil production following its invasion of Ukraine last year.
Attempts to cut off Russian exports have redrawn global trading patterns and given a boost to suezmaxes and aframaxes.
Both asset classes have had rates rallies this month.
Suezmaxes jumped from $9,534 per day at the end of September to $53,707 per day on Thursday, according to the Baltic Exchange.
Aframaxes finished September at $12,862 per day and were assessed at $55,406 per day on Thursday.
