5 Jan 2017

US oil keeps Venezuela ticking over

3:26 pm on 5 January 2017

US oil exports are helping keep Venezuela's teetering economy from collapse, new figures from the US Department of Energy suggest.

People queue outside Venezuela's Central Bank (BCV) in Caracas in an attempt to change 100-bolivar notes before they become worthless.

People queue outside Venezuela's Central Bank (BCV) in the capital Caracas in an attempt to change 100-bolivar notes before they become worthless. Photo: AFP

Venezuela's state-owned oil company Petróleos de Venezuela operates a refinery on the island nation of Curaçao, which the US data showed was by far the largest recipient of US oil exports.

Trade press reports said US crude was being used as a dilutent for the far heavier Venezuelan crude and was being re-exported to bring vital foreign exchange to Venezuela.

The figures showed US exports to Curaçao for the first five months of last year were 54,000 barrels a day, way ahead of the Netherlands on 39,000 and Japan on 17,000.

Venezuela depends on oil exports to bring much-needed relief as it struggles against rampant inflation, high unemployment, non-functioning industry and shortages of everyday goods.

The country's President Nicolas Maduro announced last month the planned withdrawal of the country's largest denomination, the 100-bolivar banknote, would be delayed until 2 January after the new 500-bolivar note had arrived.

Many Venezuelans spent days queuing to exchange the old 100-bolivar notes, while thousands of shops closed and people forced to rely on credit cards and bank transfers were sometimes left unable to buy food.

Mr Maduro has previously claimed gangs hold more than 300 billion bolivares worth of currency, most of it in 100-bolivar notes, and said this was the reason for the withdrawal.

However, the central bank data suggested there were more than six billion 100-bolivar notes in circulation - almost half of the country's total currency.

The strength of the US oil sales contrasted with intense political opposition in Washington to the militant left wing views of the Venezuelan government.

US oil exports were banned by then-US President Richard Nixon in the 1970s as a counter to a politically motivated oil embargo by Arab oil producers.

The ban was later seen as anachronistic and was rescinded just one year ago.

Oil exporters rushed to take up the opportunity, making up about 0.5 percent of the world's total oil demand in the first five months.

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