The attack by the United States on Venezuela – the country that holds the largest oil reserves in the world – had repercussions on gold quotes and dollar, and also in oil sales prices.
For specialist heard by Brazil Agencythis price volatility, however, is more speculative in nature than due to the relevance of Venezuelan oil for world trade in the product.
Professor of the Energy Planning Program at the Alberto Luiz Coimbra Institute for Postgraduate Studies and Engineering Research at the Federal University of Rio de Janeiro (Coppe/UFRJ), Alexandre Szklo recalls that Venezuela currently accounts for “less than 1%” of the world’s oil market.
The professor attributes this small participation to two reasons: the first is related to the embargoes imposed by the United States on Venezuela; the second is due to the characteristics of Venezuelan oil which, as it is very heavy, requires a specific type of refineries located in the Gulf of Mexico and the USA.
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Largest reserve in the world
Being the largest reserve in the world does not necessarily mean having immediate access to this wealth that has caused so many wars throughout history.
The oil refining process goes through several stages that begin with planning and preliminary research, to understand the characteristics of the product to be explored in each new well; until extraction, treatment in refineries, distribution and, finally, its commercialization.
Small participation
“Today, Venezuela produces very little and offers very little to the international oil market. One thing is the potential that Venezuela has to produce oil, especially extra-heavy oil. Another thing is how much Venezuela supplies the world with oil. Currently, it is less than 1%”, explained the UJRJ professor, referring to the fact that the majority of Venezuelan oil is in reserves without structures for exploration.
“Venezuela’s short-term impact on the international oil market, therefore, is quite limited,” he added.
Furthermore, there are questions related to the specificities of the oil that is mostly found in Venezuela. According to the professor, not all refineries have the capacity to refine and treat heavy oils.
“So, in practice, this oil ends up having a much greater impact on the more complex refineries on the coast of the Gulf of Mexico and the United States. [O petróleo venezuelano] would potentially serve the most complex refineries located in the region”, he added, highlighting that in a long-term context, Venezuelan production could become important.
Clandestine trade
Alexandre Szklo also cites the clandestine oil trade that has attracted attention, amid the context of dispute over Venezuelan reserves. As he explains, this is the alternative left to producing countries to circumvent embargoes such as those of the United States on Venezuela and Iran; and from Europe to Russia.
“The clandestine oil trade carried out by so-called ghost fleets is closely associated with sanctions”, says the Coppe expert.
“In practice, every oil tanker needs to have an insurance contract for the cargo it is transporting. It has the registration number. When you have sanctions, this means that there is a freight premium for certain ships that do not follow the typical contracting criteria, nor are they insured for their cargo”, he adds.
According to him, these ghost fleets represent more risks for the transport of this fuel: “There is speculation of something on the order of 300 large oil tanker vessels making up these ghost fleets.”
