situation report

Jun 7, 2019 | 16:47 GMT

1 min read

U.S., Venezuela: Washington Targets Diluents Needed to Thin Venezuelan Oil

What Happened: The U.S. Treasury Department announced on June 6 that companies exporting diluents to Venezuela could be subject to U.S. sanctions, Reuters reported.

Why It Matters: Diluents such as naphtha allow Venezuela's state oil company, Petroleos de Venezuela (PDVSA), to thin its heavy crude oil for pumping through pipelines for export. With fewer diluents available, PDVSA's output will plummet even more sharply. This will lead to less revenue for President Nicolas Maduro's government and exacerbate Venezuela's economic instability.

Background: U.S. sanctions already prohibit people or companies subject to U.S. jurisdiction from doing business with PDVSA or investing in Venezuela's oil sector. The sanctions have contributed to a decline in Venezuelan oil production.

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