Iran and Venezuela agreed with oil export deal

Iran and Venezuela agreed with oil export deal Despite U.S. sanctions.

Venezuela has signed an important agreement to swap their heavy crude oil with Iranian condensate. Five sources familiar with the arrangement said that it could enhance the top quality of the crude tar-like. 

Meanwhile, the first cargoes are scheduled for delivery this week.

In the midst of how this South American country seeks to increase its oil exports amid U.S. sanctions?

According to sources, the accord between the state-owned companies Petroleos of Venezuela (PDVSA) and National Iranian Oil Company (NIOC) strengthens the partnership between Washington’s two adversaries.

One person mentioned that the swap agreement was planned to run for six months during the initial phase, but it could extend.

The oil ministry from Venezuela and Iran and the state-owned PDVSA and NIOC have not responded to requests for comments.

According to a Treasury Department email to Reuters, the deal could represent an infringement of U.S. sanctions on both countries. 

It referenced U.S. government orders that provide the sanctions.

U.S. sanctions programs do not just prohibit Americans from conducting transactions with the oil sector located in Iran and Venezuela.

But they are also threatening to apply “secondary sanctions” against any non-U.S. person or organization who conducts transactions with either of the countries’ oil firms.

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Secondary sanctions can entail different penalties against the individuals targeted, such as closing off entry to U.S. financial system, penalties, or freezing U.S. assets.

All “transactions with NIOC by non-U.S. persons are generally subject to secondary sanctions,” the Treasury Department said in response to a question regarding the agreement. 

However, the Treasury Department also stated that the deal “retains authority to impose sanctions on any person that is determined to operate in the oil sector of the Venezuelan economy,” however. It did not specify if the current agreement constitutes a breach of sanctions.

U.S. sanctions are often implemented according to the current administration. 

The former U.S. President, Donald Trump’s administration, confiscated Iranian gasoline cargoes in the ocean headed to Venezuela in the hopes of preventing sanctions in the past. 

However, Trump’s predecessor Joe Biden has made no similar actions.

In Washington, the United States, a source who is familiar with the subject, said that the trade agreement between Venezuela and Iran is in the minds of U.S. government officials as possible sanctions violations in recent months. 

They are keen to know the extent to which it can take in the real world.

U.S. officials are concerned that, as the source stated, dilute Iranian shipments may help provide the Venezuelan president Nicolas Maduro with more of an income stream as he negotiates with Venezuelan opposition to hold elections.

Sanctions against both countries have reduced their oil exports in recent years and prompted NIOC to aid Venezuela via fuel swaps and shipping services and distribute the export markets to Asia. 

In a session during the U.N. General Assembly in New York on Wednesday, the foreign ministers from Venezuela and Iran have publicly announced their determination to strengthen bilateral trade despite the U.S. attempts to block the trade.

Trump’s tightening sanctions contributed to a decline of 38% in Venezuela’s oil exports, the foundation of the country’s economy – to the lowest in 77 years. 

It also reduced fuel imports and exacerbated the shortage of gasoline in the country by around 30 million.

A U.S. Treasury spokesperson said that the Department was “concerned” about reports of oil-related deals with Venezuela and Iran. However, they had not confirmed the details.