Jan 29, 2019

Unpacking Trump's Venezuelan oil move

Ben Geman, author of Generate

Oil refinery in Maracaibo, Venezuela. Photo: Federico Parra/AFP/Getty Images

The stocks of refiners Valero and Chevron, two big buyers of Venezuelan crude, barely moved after the White House rolled out major sanctions against the country's state oil company PDVSA.

Why it matters: The muted response signals how the new sanctions, while a major escalation, aren't going to upend refining markets or spike prices for now.

  • Why: There are at least 2 reasons: The Treasury Department orders give refiners several months to wind down purchases, and refiners could see this coming.
  • Valero, the second-largest U.S. importer of Venezuelan crude after PDVSA subsidiary Citgo, said in a statement that it "will re-optimize our crude supply to minimize any resulting impacts."

What they're saying: "The U.S. government has gone to great lengths to try to limit the implications for the operations of CITGO and the U.S. Gulf Coast refining industry," sanctions expert Elizabeth Rosenberg said in this helpful S&P Global Platts explainer.

  • But Rosenberg, a former Treasury adviser, added: "Nevertheless, the new financial pressure plan will have tremendous effects for US firms who are scrambling to evaluate how PDVSA and Maduro will react and whether pressure on US energy product sales to Venezuela will be next."

What's next: The U.S. was importing over a half-million barrels of Venezuelan crude per day as of late 2018, but refiners will look to other sources.

  • "If sanctions are fully imposed, flows of heavy crudes into the US are most likely to increase from Mexico, Canada, Saudi Arabia and Iraq, according to analysts," S&P Global Platts writes.

Threat level: ClearView Energy Partners said in a note that even with the 3-month wind-down, if Venezuelan President Nicolás Maduro cuts exports to the U.S., "Gulf Coast refiners could be forced to bid early for heavy crude at premiums that reflect logistics costs."

  • "In addition, a shortage of diluent could accelerate Venezuela’s crude declines, creating potential for market tightness in 2Q2019 ahead of summer driving season and the next Iran sanctions window in May … if Maduro lasts that long."

Go deeper: U.S. sanctions Venezuela's state oil company in push for regime change

Go deeper

Updated 53 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 11:30 a.m. ET: 5,850,258 — Total deaths: 361,249 — Total recoveries — 2,444,898Map.
  2. U.S.: Total confirmed cases as of 11:30 a.m. ET: 1,724,873 — Total deaths: 101,698 — Total recoveries: 399,991 — Total tested: 15,646,041Map.
  3. Public health: Hydroxychloroquine prescription fills exploded in March —How the U.S. might distribute a vaccine.
  4. Business: Many poor and minority families can't afford food or rent.
  5. 2020: Trump courts Asian American vote amid coronavirus.
  6. ⚽️ Sports: European soccer's push to return.

Trump's big, empty beef with Twitter

Illustration: Aïda Amer/Axios

President Trump finally acted on his now year-old threat to take action against social media platforms for alleged bias against conservatives. But so far, according to experts in both government and the industry, the threat looks mostly empty.

Driving the news: Trump escalated his war on Twitter Friday morning, tweeting repeatedly that the company needs to be regulated after it overnight added a warning label to a tweet of his calling for the military to start shooting looters, which violated Twitter’s rules against glorifying violence.

In photos: Protests over George Floyd's death grip Minneapolis

The Third Police Precinct burns in Minneapolis on Thursday night. Photo: Stephen Maturen/Getty Images

Demonstrators demanding justice burned a Minneapolis police station and took control of the streets around it last night, heaving wood onto the flames, kicking down poles with surveillance cameras and torching surrounding stores.

What's happening: The crowd was protesting the death of George Floyd, an unarmed black man whose life was snuffed out Tuesday by a white Minneapolis police officer who kneeled on his neck for about eight minutes.