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The recent sanctions by the US government to PDVSA may open the door for a 'boom' in the Latin American oil exportation
The tension that exists in Venezuela is getting bigger and the political actors, internal and external, that have been involved, are taking stronger measures to try to end the crisis. On behalf of the US government, the position is very clear: unrestricted support for Juan Guaidó, a political siege that, they hope, forces Nicolás Maduro to abandon power, and a reorganization of Venezuela under the interests of this great world power.
Under this line of action, the United States governments recently announced an economic blockade against PDVSA, the state oil production company in Venezuela, which seeks to nip the entry of capital into the Latin American country by selling barrels of oil.
The blockade, however, has more factors than simply a cut in the sale of barrels. As Elliott Abrams, the special envoy of the United States government for Venezuela, explained, the blockade seeks, in reality, to cut off the flow of money that was sent precisely from the United States to Venezuela.
The Venezuelan company has three main buyers: the United States, China, and Russia (and maybe India can be added as a prospect of a large buyer). Of these, China and Russia were not really buying this oil but the barrels they received were in part paid by the multimillionaire loans that the government of Nicolás Maduro has received. Therefore, the United States was the one that still maintained the economic flow of PDVSA, the reason why they decided to cut with it.
Additionally, the United States warned foreign financial institutions, especially European ones, that any transaction that is associated with the Venezuelan government will be sanctioned, since, according to the US government, Maduro would be using Russian banks to receive payments from PDVSA and move capital.
An opportunity for the other Latin American countries?
In this panorama, the production of Latin American oil has taken a fundamental role, because now new countries have the option to move forward in production and export, a situation that historically has always been dominated by Venezuela. Countries like Colombia, Mexico or Brazil have seen a big change in their production.
Colombia, for example, registers its best stage of production in years, with a market that focuses mainly on sales to the United States. This change makes the dividends obtained by oil production increase significantly.
Mexico is another country that has increased its sale to the United States. However, the recent situation of Pemex, its possible restructuring and the policies of López Obrador against this company, make the future of Mexican oil production uncertain.
Read also: The bad decisions that have condemned Pemex
For its part, Brazil, together with Petrobras, has also increased its production and at this moment it has quite high production figures. So high that they have even come to worry OPEC (Organization of Petroleum Exporting Countries) in relation to the production limit that was imposed last year. This limit is also another of the fundamental factors to be taken into account since OPEC decreed at the end of last year that it would put a limit on oil production, which necessarily led to an increase in prices.
The big consumers of oil, with China and the European Union at the head, more than the United States, have insisted on increasing production to ease prices. However, OPEC has ignored these requests. In this context, Latin American countries with lower production, such as those already mentioned, being outside the jurisdiction of OPEC, can take advantage of a rebound in prices, a collapse of the historical producer and sell as long as possible.
LatinAmerican Post | Jorge Ovalle
Translated from "América Latina: ¡A tomar ventaja de la escasez de petróleo venezolano!