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From the Maldives to Venezuela: how Iran gets oil to an ally

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© Reuters. FILE PHOTO: An oil tanker is docked while oil is pumped into it at the ships terminal of PDVSA’s Jose Antonio Anzoategui industrial complex in the state of Anzoategui April 15, 2015. REUTERS/Carlos Garcia Rawlins

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By Marianna Parraga

HOUSTON (Reuters) – A Venezuela-owned tanker in March sailed to a remote spot in the Indian Ocean and met an Iran-flagged vessel, took on a cargo of Iranian condensate and sailed home, according to monitoring services and shipping documents.

The ship-to-ship transfer off The Maldives was the latest tactic by the two countries to keep their oil flowing to markets despite U.S. sanctions. The widening energy cooperation between the nations is helping cash-scrapped Venezuela obtain supplies to convert its extraheavy oil and boost exports.

Two Iranian very large crude carriers (VLCC) were in Venezuelan waters discharging imported condensate and crude for state-owned oil company PDVSA this month, as Iran’s oil minister Javad Owji met in Caracas with Venezuelan President Nicolas Maduro.

Since 2020, Iran also has helped its South American ally by sending gasoline and equipment for repairing PDVSA’s dilapidated refineries. One plant is restarting this month after a lengthy revamp.

Venezuela-owned tanker Maximo Gorki, operated by PDVSA’s maritime arm PDV Marina, is the only supertanker the South American nation has left after losing in 2020 three others to PetroChina Co as part of a debt dispute.

The tanker is mostly used for moving PDVSA’s oil between domestic ports, but it also has carried crude to Asia since Washington imposed sanctions on Venezuelan oil in 2019.

Early this year, PDV Marina had to send a replacement crew to China to rescue Maximo Gorki, which was stranded for weeks due to mechanical problems.

In March, the tanker finished transferring a cargo of Venezuelan heavy crude in the South China Sea, according to TankerTrackers.com, a monitoring service that used satellite pictures to identify the vessels.

Days later, the Maximo Gorki loaded Iranian condensate, also via a ship-to-ship (STS) transfer 37 nautical miles from The Maldives, from the VLCC Huge, a National Iranian Tanker Co (NITC) vessel, TankerTrackers.com said.

Reuters could not independently verify the vessels’ identities. PDVSA and NITC did not reply to requests for comment.

The Maldives government did not immediately reply to a request for comment. The STS transfer took place outside its territorial waters.

ON ITS WAY

The Maldives’ STS exchange was new for Venezuela, but Iran has conducted at least one prior exchange in waters near the archipelago, according to United Against Nuclear Iran (UANI), an advocacy group that monitors Iran-related tanker traffic.

“As Maximo Gorki was making its voyage toward Venezuela, Iran was able to send out a NITC tanker to meet it near The Maldives,” said Claire Jungman, UANI’s chief of staff.

“The location is strategically convenient for Iran, taking roughly five days for the Iranian tankers to get from Khor Fakkan to Male,” The Maldives capital.

The supertanker last week docked in Venezuela and discharged part of its 2-million-barrel cargo of Iranian condensate. It followed by days the arrival of Iranian vessels Dino I and Derya, which brought Iranian heavy crude and condensate, respectively, part of a swap agreement signed last year by the two states’ oil companies.

At least another 2 million barrels of Iranian oil and 1 million more barrels of condensate are expected to be imported this month. PDVSA plans to send heavy crude and fuel oil to Iran’s National Iranian Oil Co. in exchange, a source involved in the cargo scheduling said.

NIOC did not reply to a request for comment.

Commodities

Oil prices open lower as EU struggles to seal Russia import ban

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© Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS/Agustin Marcarian

By Laura Sanicola

(Reuters) – Oil prices opened lower in early Asian trade on Tuesday after the European Union’s efforts to enact a ban on Russian oil imports, a move that would tighten global supply, ran into resistance from member country Hungary.

Brent crude futures fell 35 cents, or 0.3%, to $113.89 a barrel at 0004 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 52 cents, or 0.5%, to $113.68 a barrel.

EU foreign ministers failed on Monday in their effort to pressure Budapest to lift its veto of a proposed oil embargo on Russia following the country’s invasion of Ukraine. An embargo would require approval from all EU nations.

On the demand side, data from China showed the world’s second-biggest economy processed 11% less crude oil in April than a year earlier amid tight COVID-19 lockdowns, with daily throughput falling to the lowest since March 2020 as refiners slashed operations on weaker consumption.

While Chinese demand drops, in the United States producers are ramping up in order replenish inventories that have dwindled in the wake of Russia’s war on Ukraine – which Moscow calls “a special military operation” – and recovery from the coronavirus pandemic.

Oil output in the Permian in Texas and New Mexico, the biggest U.S. shale oil basin, is due to rise 88,000 barrels per day (bpd) to a record 5.219 million bpd in June, the U.S. Energy Information Administration (EIA) said in its productivity report on Monday.

Inventories in the Strategic Petroleum Reserve fell to 538 million barrels, the lowest since 1987, data from the U.S. Department of Energy showed on Monday.

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Commodities

Oil settles higher on demand optimism, gasoline strength

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© Reuters. FILE PHOTO: An aerial view shows an Idemitsu Kosan Co. oil facility in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Mandatory credit Kyodo/via REUTERS

By Laura Sanicola

NEW YORK (Reuters) -Oil prices rose on Monday on optimism that China would see significant demand recovery after positive signs that the country’s coronavirus pandemic was receding in the hardest-hit areas.

Brent crude futures for July delivery rose $2.69 to settle at $114.24 a barrel, a 2.4% gain, while U.S. West Texas Intermediate (WTI) crude rose $3.71, or 3.4%, to $114.20 a barrel.

Shanghai aims to reopen broadly and allow normal life to resume for the city’s 25 million people from June 1, a city official said on Monday, after declaring that 15 of its 16 districts had eliminated cases outside quarantine areas.

However, it is estimated that 46 cities in China are under lockdowns, hitting shopping, factory output and energy usage.

“We are seeing a lot of signals that demand will start returning in that region, supporting higher prices,” said Bob Yawger, director of energy futures at Mizuho.

In line with an unexpected sharp fall in industrial output in April, China processed 11% less crude oil, with daily throughput the lowest since March 2020.

U.S. gasoline futures set an all-time high again on Monday as falling stockpiles fuelled supply concerns. [EIA/S]

Stockpiles in the Strategic Petroleum Reserve fell to 538 million barrels, the lowest since 1987, data from the U.S. Department of Energy showed on Monday.

“Record high gasoline pricing has shown no sign of spurring demand destruction with the U.S. economy appearing sufficiently strong to drive a robust kickoff to the heavy driving season in just a couple of weeks,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

Oil prices also found some support as the European Union’s diplomats and officials expressed optimism about reaching a deal on a phased embargo of Russian oil despite concerns about supply in eastern Europe.

However, EU foreign ministers failed on Monday in their effort to pressure Hungary to lift its veto of the proposed oil embargo, with Lithuania saying the bloc was being “held hostage by one member state”.

German Foreign Minister Annalena Baerbock said the bloc would need a few more days to find agreement.

“With a planned ban by the EU on Russian oil and slow increase in OPEC output, oil prices are expected to stay close to the current levels near $110 a barrel,” said Naohiro Niimura, a partner at Market Risk Advisory.

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Commodities

Moscow says G7 attempts to isolate Russia make global food crisis worse

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© Reuters. FILE PHOTO: Ears of wheat are seen in a field near the village of Zhovtneve, Ukraine, July 14, 2016. REUTERS/Valentyn Ogirenko

(Reuters) – Russia’s foreign ministry said on Monday that attempts by the West and the G7 group of nations in particular to isolate Moscow have worsened global food shortages.

G7 foreign ministers promised on Saturday to reinforce Russia’s economic and political isolation, continue supplying weapons to Ukraine and work to ease food shortages stemming from Russia’s Feb. 24 invasion of its neighbour.

“Attempts to divert Russia economically, financially and logistically from long-standing channels of international cooperation are only exacerbating economic and food crises,” the foreign ministry said in a statement on its website.

“It should be noted that it was the unilateral actions of Western countries, primarily from the Group of Seven, that exacerbated the problem of breaking the logistics and financial chains of food supplies to world markets.”

Before the war Ukraine and Russia combined accounted for about 29% of wheat production for the world market.

Moscow calls its actions in Ukraine a “special military operation” to disarm Ukraine and protect it from fascists. Ukraine and the West say the fascist allegation is baseless and that the war is an unprovoked act of aggression.

(Reporting in Melbourne by Lidia Kelly; editing by Grant McCool)

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