Page 4 - LatAmOil Week 23 2020

LatAmOil COMMENTARY LatAmOil

Venezuela hopes the Iranian supplies will alleviate gasoline shortages (Photo: Kayhan)

Venezuela’s Iranian stopgap

Gasoline shortages are likely to remain a problem for Maduro after Iranian supplies run out

SINCE late May, Venezuela has imported five Domestically, though, the response has been
cargoes of gasoline from Iran. Predictably, its somewhat different.
WHAT: decision to do so has drawn a sharp response
from the US, which has imposed sanctions on Local considerations
Caracas hopes that both Venezuela and Iran. Officials in Caracas, of course, have heaped
imported Iranian gasoline Over the last week, officials in Washington praise on Tehran for its willingness to supply
and price reforms will help have talked about their willingness to impose the gasoline that Venezuelan refineries are no
meet demand. additional restrictions on trade with Caracas longer in a position to produce in large quan-
and Tehran. They have also said they intend to tities. For example, President Nicolas Maduro
WHY: step up enforcement of existing sanctions – and recently thanked his Iranian counterpart Has-
Some of the fuel has been have shown that they are serious by prepar- san Rouhani, as well as Iran’s Supreme Leader
diverted to Cuba, so the ing to apply penalties to as many as 50 crude Ayatollah Khamenei, for the fuel deliveries. The
additional supplies may not oil and petroleum product tankers in order to shipments prove that Venezuela has “good and
last long. discourage trade between Iran and Venezuela, brave friends” in the world, Maduro said.
as a source with knowledge of the matter told On a more practical note, Caracas has also
WHAT NEXT: Bloomberg on June 9. (The source also said, indicated that it is importing gasoline from Iran
Continued shortages could though, that the US government was taking this within the framework of a new approach to
provoke popular discontent, path with an eye to avoiding a military confron- meeting domestic fuel demand.
especially since the tation with those two countries.) That new approach has implications for
opposition says it can solve In short, the Iranian gasoline shipments demand as well as supply, since it includes the
the problem. seem to have landed Venezuela in the diplo- partial lifting of long-standing subsidies on gas-
matic equivalent of hot water. That is, they have oline prices and monthly quotas for purchasing
attracted negative attention from the US, which fuel at artificially low prices, as well as co-oper-
has already inflicted no small amount of damage ation with a select few independent firms to sell
on the Venezuelan oil industry over the last year. premium motor fuel.

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