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DMEA COMMENTARY DMEA

Venezuela’s Iranian stopgap

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

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

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