Chart of the Week: US weekly crude imports from Venezuela

Ahead of the sanctions, US weekly crude imports from Venezuela were already close to zero, at 131,000/barrels per day in the week ending April 21. Since the implementation of the first round of sanctions at the beginning of the year, the level has plunged by 80%.

Over the past three months, the US drop has been cushioned by Asian countries, mostly India and China, that have been willing to increase purchases. However, based on the latest data, it seems that India is reviewing lower its need to purchase Venezuela oil as the Trump administration adopts a tougher stance against the country. In the medium term, it seems unlikely that Venezuela will be able to balance the US drop by selling more oil to Asia. 

The US sanctions are one of the two key issues facing Venezuela. Because the shortage of US dollars is becoming more severe and long-term underinvestment in the oil sector is hitting oil production, the country may not be able to produce and export much oil in the coming months.

The latest data from JODI indicates that crude oil production has fallen to 1.56m/barrels per day in February. Based on the current trend, it is likely to fall to 1m/barrels per day by summer and even much lower considering the impact of blackouts that frequently halt operations at the country’s main oil port of José. It will ultimately dry up the sources of financing available and lead to lower imports of goods and services in a context of extreme shortages of basic goods. The real question is how long the Maduro regime can last before the country falls apart by itself.