Exxon Mobil Corp. this week banned the use of vessels linked to oil flows from Venezuela in the last year, according to four people familiar with the matter, putting new pressure on the U.S. sanctioned country and on global crude freight rates.
Washington has imposed several rounds of sanctions on Venezuela this year to oust socialist President Nicolas Maduro, whose 2018 re-election has been dismissed by the United States and dozens of other countries as a sham. Some measures have led tanker operators to stop carrying oil for Venezuela's state-run PDVSA oil firm.
The decision by world's largest publicly-traded oil producer to ban the Venezuela-linked tankers should affect about 250 vessels, two of the people familiar with the matter estimated.
Exxon declined to comment. PDVSA did not immediately respond to requests for comment.
Over 25 foreign vessels reach Venezuelan ports per month, according to PDVSA and Refinitiv Eikon data. Some are known to turn their transponders off to avoid detection amid the tough U.S. sanctions targeting Venezuela's oil industry.
Average freight earnings for supertankers on the closely-watched U.S.-China route jumped over $20,000 on Friday to $87,625 a day, the highest level since rates for the route were first published in March, Baltic Exchange data showed.
"The VLCC pool here (in the Caribbean) has been very thin for some while, and this week rates pushed to levels not seen for many a year—$12 million now to the Far East and it's almost 'name your price,'" E.A. Gibson Shipbrokers Ltd said in a report on Friday.
Another ship broker who declined to be identified to avoid upsetting clients said Exxon's directive may have a limited impact on freight rates. But he said those rates could go higher "if it spreads to other charterers beyond Exxon."
A lack of vessels willing to carry Venezuelan oil exports is hurting Cuba, the crisis-torn country's main political ally, which imposed fresh austerity measures last month due to power cuts and an acute shortage of fuel.
Recommended Reading
Hess Corp. Boosts Bakken Output, Drilling Ahead of Chevron Merger
2024-01-31 - Hess Corp. increased its drilling activity and output from the Bakken play of North Dakota during the fourth quarter, the E&P reported in its latest earnings.
Petrie Partners: A Small Wonder
2024-02-01 - Petrie Partners may not be the biggest or flashiest investment bank on the block, but after over two decades, its executives have been around the block more than most.
CEO: Coterra ‘Deeply Curious’ on M&A Amid E&P Consolidation Wave
2024-02-26 - Coterra Energy has yet to get in on the large-scale M&A wave sweeping across the Lower 48—but CEO Tom Jorden said Coterra is keeping an eye on acquisition opportunities.
CEO: Magnolia Hunting Giddings Bolt-ons that ‘Pack a Punch’ in ‘24
2024-02-16 - Magnolia Oil & Gas plans to boost production volumes in the single digits this year, with the majority of the growth coming from the Giddings Field.
E&P Earnings Season Proves Up Stronger Efficiencies, Profits
2024-04-04 - The 2024 outlook for E&Ps largely surprises to the upside with conservative budgets and steady volumes.