Crude inventories in Venezuela are reaching record highs.
Oil inventories have climbed to a record high by 32.8 million barrels. This record was last seen in January 2014, says Orbital Insight research firm.
The U.S. had imposed sanctions on Venezuela on January 28. This sanction has led to a supply glut in Venezuela, according to data from Orbital insight, which uses satellite imagery in gauging crude stockpiles across the globe.
China and India are the chief buyers of Venezuela crude. But they already have the required supply, their need for extra crude remains unlikely, says a specialist Ossa from Orbital Insight. Energy specialist Mario d la Ossa says that Indian oil inventories are up by 5.6 million barrels while in China it is 18.5 million barrels.
But oil inventories in Venezuela are accumulating and are far higher than its requirement. The U.S. Gulf Coast which uses dense crude from Venezuela has cut its imports from Venezuela.
The U.S. sanctions have largely hampered export of crude oil from Venezuela. The economy of Venezuela which largely depends on its crude oil exports is severely hampered in its revenue. This, in turn, has hit the common man in Venezuela.
Citgo Petroleum Corp in the U.S. is the largest importer of crude from Venezuela. With the sanctions on Jan 28, Citgo is losing its crude supply from Venezuela and has a short supply by about 620,000 barrels after this period.
Now, Asia is the next importer and if crude is sent to Asia from Venezuela, it means a longer voyage and delayed payments for Venezuela, says RBC Capital Markets energy strategist Michael Tran.
With sanctions imposed on Venezuela, the global crude oil prices have gone up swiftly. Brent crude was trading at $67.07 per barrel on Thursday, which is at a three-month high. With the oil supply glut removed by the OPEC + countries, crude market has stabilized, and prices are on the increase.