Cuba, Venezuela and Iran Oil Problems Under US Sanctions

US Crude oil production has been at 12.1 to 12.3 million barrels per day for the last few weeks. This is 2.4 million barrels per day more than Saudi Arabia. US crude oil production has been at abou the level of Saudi Arabia and Iran combined.

Iran posted OPEC’s biggest supply drop in April. Iran’s production dropped 150,000 bpd. Venezuela, supply fell by 100,000 bpd due to U.S. sanctions and a long-term decline in production.

Iran dropped 154,000 bpd to 2.554 million bpd in April. Iraq dropped 113,000 bpd to 4.63 million bpd. Saudi Arabia had 45,000 bpd less oil in April at 9.742 million bpd.

Venezuela had a slight increase of 28,000 bpd to 768,000 bpd in April. In 2018, Venezuela averaged was 1.34 million bpd.

EIA predicts global oil demand would average 100.4 million bpd in 2019. This will be first full year over 100 million bpd.

EIA forecasts that crude oil production in the Organization of the Petroleum Exporting Countries (OPEC) will average 30.3 million barrels per day (b/d) in 2019, down by 1.7 million b/d from 2018. In 2020, EIA expects OPEC crude oil production to fall by 0.4 million b/d to an average of 29.8 million b/d. Production in Venezuela and Iran account for most of the OPEC output declines in 2019 and in 2020.

OPEC pumped 30.23 million barrels per day (bpd) in April 2019 down 90,000 bpd from March and the lowest OPEC total since 2015.

Cuba Rationing Food and Energy Because of US Venezuela Sanctions

Cuba received 103,226 bpd of oil from Venezuela in the first half of 2015.

“Cuba needs at least 70,000 bpd from Venezuela to cover its energy deficit and avoid deeper rationing. A larger or total loss of the Venezuelan supply would have a high political and financial cost for Cuba,” said Jorge Pinon, a Cuban energy expert at the University of Texas in Austin.

Cuba was sent an average of 72,350 barrels per day (bpd) of crude and refined products in the first half of 2017.

In 2019, Venezuela’s shipments of crude for Cuba’s refineries dropped 21 percent to 42,310 bpd.

Cuba would also resell the discounted Venezuela oil to raise the $2 billion in hard currency that Cuba needed to import two thirds of their food supply.

Written By Brian Wang,

19 thoughts on “Cuba, Venezuela and Iran Oil Problems Under US Sanctions”

  1. you know, there is another possibility here. that we have reached peak conventional oil. The price of crude oil in getting higher in historical terms, and I’m not sure if extraction technology is going to keep up with the demand of what is after all a unrenewable resource.

    But estimates on peak oil are inherently based off of the size of the conventional oil reserves, and the peak oil proponents estimated 1.8 trillion barrels of supply predicting a peak in 2010. They could have simply been off by a decade.

  2. My implication was, any hope of even maintaining status quo, let alone improving is made more difficult by sanctions.

  3. Additionally, Venezuela’s oil industry was in a state of terrible disrepair long before the U.S. ever applied sanctions. U.S. sanctions may have just sped what was likely an eventuality.

  4. Sanctions are against people and companies involved in the trade, not directly against the countries that are targeted, Here’s the list of companies being sanctioned for carrying oil between the two.
    The U.S. Treasury’s Office of Foreign Assets Control named three companies based in Monrovia, Liberia — Jennifer Navigation Ltd., Lima Shipping Corp. and Large Range Ltd., along with a fourth based in Italy, PB Tankers S.P.A. Among the vessels named were Nedas, New Hellas and S-Trotter.

  5. Economy doesn’t work like that.

    You can only ignore actors with irrelevant trade levels, not the big actors that make what your people buys or buy what your people make.

    We can’t ignore China, they can’t ignore the USA.

  6. Oil price is self adjusting. Any increase in price will cause an increase in production and a decrease in demand. The effect won’t be instantaneous but will happen.

  7. No middle man in the Venezuala -> Cuba oil “trade”.

    I think the implication in this case is simply the US sanctions on Venezuela have made it very difficult for Venezuela to maintain their oil production levels.

  8. The biggest flaw in this theory is the current US Administration doesn’t exactly have a reputation for subtlety. Sabotaging the fragile Iranian oil export infrastructure would be just as easy and more effective as a precursor in limiting funding for any Iranian response.

    Besides we have two reported incidents alleging “sabotage” with no details. I’ve spent enough time at sea to know that a ship can be disabled through carelessness, inattention or simply crew fatigue. Without further details, I suggest staying skeptical about what happened as well as who did it and their motivation.

  9. If China could have settled trade outside of the USD it would have started doing so long ago. Because the entire Chinese economy is built on a closed capital account, the Renminbi is useless for foreign trade.

  10. If the American’s wanted to start a war, that was a pretty sloppy staged incident. IMO, they wouldn’t be opposed to actually blowing up a VLCC if they really “wanted” justification for going to war. My money is on Saudi Arabia sabotaging the vessels.

  11. We go after the middle men. The basic message is – “You make $1.00 by trading with us; you make $0.05 trading with Cuba. If you keep trading with Cuba; we won’t let you do any more business with us. Your choice, pal.” Yeah, it reads like a line from a bad gangster movie, but it’s better than the accepted alternative in international relations which is lethal force.

  12. I have to say the thought had crossed my mind too. It is starting to look like the “Nigerian yellow cake” excuse to cause trouble, and people like Bolton will absolutely be at the bottom of it. Bolton still thinks the second Gulf war was a great idea and we didn’t go far enough!

  13. “Iran eventually will come back for a new nuclear deal negotiations.” I don’t see that. IMO what is more likely is that countries like China will create their own monetary system that bypasses our ability to sanction them. Countries like Iran will join, Cuba and Venezuela of course, but Europe and our traditional allies will follow too. Once that happens we will have nobody but ourselves to blame for pushing too hard and losing most of our petrodollar advantage.

    At this point I cannot tell if we have sanctions on them because of their own wrongdoing or if we just use that as a pretext to jack up oil prices for our fracking industry and profits.

  14. I guess maybe I’m getting paranoid. But it seems a bit odd that Iranian proxies would attack oil carriers in a way that drew attention and anger but didn’t really do all that much damage, shortly after the US warned of exactly that (if they had intelligence about the attacks, why haven’t they now pointed to those who did it?). And shortly after sending carriers and such to the region. And shortly after Bolton ‘reviewed’ military options for attacking Iran.

    Someone wants a war, or at least wants to have a sufficient pretext for war to begin making bigger threats.

  15. How does a US sanction reduce exports to Cuba? I’m assuming Cuba doesn’t join the sanctions?

  16. Iran and Venezuela have been virtually cut off life support by now. No wonder that Iran has started playing tricks. Maduro will not give up his regime but Iran eventually will come back for a new nuclear deal negotiations.

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