Venezuela is looking to forge a stronger oil alliance with Iran, as the South American nation hopes to bolster its struggling industry which is likely to face US sanctions again in April.
Last October, the US suspended its sanctions on Venezuela for six months after President Nicholas Maduro’s government reached a deal with the opposition to make elections fairer. The sanctions were initially imposed in 2019 in response to the disputed election victory of Maduro, and state-owned oil company PDVSA was banned from exporting oil to its chosen markets.
With Washington’s sanctions due to be reinstated in April, Venezuela is turning to Iran to help keep the oil industry afloat, six people familiar with the matter told Reuters.
Venezuela initially entered an alliance with Iran three years ago, and it is now rushing to settle pending debt with Iran by accelerating deliveries of heavy crude and fuel cargoes. In mid-2023, Venezuela promised two Iranian delegations that it would catch up on payments but did not manage to do so.
A senior Iranian official told Reuters: “Despite encountering challenges, particularly in terms of payments by Venezuela, both nations remain resolute in their commitment to fortify their relationship and enhance their energy partnership in the face of American pressure.”
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Crude and fuel supply from Venezuela to Iran fell by 56% between 2022 and 2023 to 39,400 barrels per day. The pact between the two countries was projected to be worth $25bn in trade and investment since 2022, but the value of the ongoing business represents less than $10bn in total.
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By GlobalDataA Venezuelan refinery worker told Reuters: “Everything related to Iran has faded. We only see companies authorised by the US to do business in Venezuela. Some imported spare parts are arriving, but they are American.”
