Updated 09:49 PM EST, Mon, Nov 30, 2020

Why Venezuela is Importing US Oil Despite Having 298 Billion Barrels

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Despite having billions of barrels of oil, Venezuela has just bought crude from the United States.

According to CNN, the Latin American country has acquired about half a million barrels of oil transported using a ship from the US.

The information was provided by the research firm ClipperData, who highlighted that the imported crude oil was taken to a facility in Curacao, a Dutch Caribbean island.

CNN noted that this action has made a lot of people skeptical since Venezuela is known to have 298 billion barrels of oil reserve already, based on figures from the Energy Information Administration.

"That's more than Saudi Arabia, Russia or Iran, and eight times the reserves of the United States," added the same report.

But it explained that the oil in the country is "heavy and hard to refine" prior to it being sold to other nations.

A process of mixing this oil with other crude types is required to be able to attain a quality which will be approved by nations wanting to purchase oil.

Oil market analyst Nilofar Daidi told CNN that Venezuela has gotten used to importing lighter oil types from nations like Nigeria, Russia and Angola.

"It's just cheaper to bring a tanker of light crude from the U.S. Gulf than to ship it from West Africa or North Africa," Saidi added.

Meanwhile, Bloomberg said the United States has started supplying oil to Organization of the Petroleum Exporting Countries (OPEC) members after it lifted restrictions on its crude last year.

This oil import from the US, as per Frost & Sullivan LP head of oil and gas Carl Larry, highlights the desperation of the state-owned gas company in Venezuela.

 "It's well known PDVSA has had issues running their refineries in recent years. It really raises a red flag about their economic situation and where their oil company is situated," he added.

Currently, the world is facing an oil glut crisis. The Wall Street Journal noted that the strong oil output in the Middle East and the United States has caused the extreme reduction of oil prices, the lowest recorded in more than 10 years.

It highlighted that the global oil glut has already pulled the price of an oil barrel down by almost 60 percent in the last 18 months.

In line with this, Reuters said that Venezuela has announced that countries producing oil, like Russia and Iran, have expressed their intention to support an emergency meeting by OPEC and non-OPEC members.

This meeting has long been called for to address the sudden dip in oil prices this year.

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