- Mar 22, 2019
- Oil Price
The opposition-led National Assembly of Venezuela this week voted to suspend crude oil shipments to Cuba after its president, Juan Guaido, slammed these exports as “funding dark purposes” in a tweet from Sunday.
The Economist Intelligence Unit reports that Guaido’s proposal was voted for unanimously and took immediate effect. However, it remains to be seen whether it will take actual effect as the Maduro government still seems to be in charge of PDVSA, the troubled national oil company.
Last week, Guaido tweeted that Venezuela was sending around 47,000 bpd of crude to Cuba and these were worth US$2.58 million that would be better used at home.
“Venezuela needs more than ever to leverage its resources, rather than fund dark purposes. For years, Cuba's interference was allowed, justifying with an ideological brotherhood that was nothing more than giving away our oil,” the self-declared interim president of Venezuela said when Venezuela was struck by a large-scale power outage.
Venezuela is Cuba’s largest oil supplier under a barter deal sealed by the late leaders of the two countries, Hugo Chavez and Fidel Castro. The deal envisaged Cuba getting regular shipments of crude in exchange for its highly trained doctors and other professionals to work in Venezuela.
At one point during this partnership, Cuba was receiving more than 100,000 bpd of Venezuelan crude, an analysis by Oliver Pieper for Deutsche Welle said. Now, however, this is probably down by a half as Venezuela struggles to keep its fields producing. Even so, Venezuelan crude is an important part of Cuba’s energy mix and its elimination from this mix would almost certainly lead to power outages for Cuba as well.
According to the Economist Intelligence Unit, Guaido’s National Assembly cannot stop Venezuelan shipments of crude to Cuba unless the U.S., which was quick to recognize the opposition leader as the legitimate leader of Venezuela, imposed more sanctions, targeting shipping and insurance companies involved in Venezuela crude oil exports to the island.
By Irina Slav for Oilprice.com