Generic Hero BannerGeneric Hero Banner
Latest Market News

US argues against Citgo sale: Update

  • Spanish Market: Crude oil, Oil products
  • 17/07/20

Adds detail from hearing.

Advancing the sale of Venezuela's US refining subsidiary Citgo could damage US foreign policy goals and that country's struggling opposition beyond repair, President Donald Trump's administration wrote in an 11th-hour filing ahead of today's oral arguments on the refiner's future.

Letters from the US Treasury's Office of Foreign Assets Control (OFAC) and US Special Representative for Venezuela Elliott Abrams argued that establishing a process to satisfy an international arbitration award with shares of the roughly 770,000 b/d refining business would only complicate US strategy there.

Moving forward with efforts by defunct Canadian mining firm and arbitration winner Crystallex would instead damage Venezuelan support for the US-recognized opposition working to remove President Nicolas Maduro from power, Abrams wrote.

"Every Venezuelan knows of this company and it is viewed, as are Venezuela's oil reserves, as a central piece of the national patrimony," Abrams wrote. "The impact on [US-recognized interim president Juan] Guaido, the interim government and US foreign policy goals in Venezuela would be greatly damaging and perhaps beyond recuperation."

Abrams supported Guaido's arguments that his US-recognized leadership should dissolve a 2018 ruling exposing Citgo to the billions of dollars sought by Venezuela's creditors. And OFAC denied Crystallex arguments that determining how to proceed with a sale would help the office decide whether to grant the company a license to execute it.

Opposition leaders have long hoped for executive branch assistance in the US District of Delaware case that has come perilously close to ending Venezuelan control of one of its most valuable overseas assets. Yesterday's late filing arrived more than seven months after an initial invitation from the court to respond, two months after another solicitation of executive interest and less than 15 hours before today's teleconference on whether to develop sale proceedings on shares of Citgo to help satisfy a $1.4bn arbitration award.

"The US sincerely apologizes to the court and the parties for any inconvenience caused by filing so close to the hearing date," the Justice Department said.

US attorneys participated in the hearing but did not expand on letters filed last night.

US support of Guaido is not news to the court, which accepted the opposition leader's representatives on behalf of Venezuela soon after the executive branch recognized him as interim president in January 2019. Guaido's appointed ad hoc boards represent Citgo and Venezuelan national oil firm PdV in US courts.

His representatives argued unsuccessfully against a sale in appeals last summer before the US 3rd Circuit Court of Appeals, and failed to attract consideration from the US Supreme Court this year.

But the opposition government can still persuade the US District Court of Delaware that circumstances have changed enough to remove a ruling argued in 2018 by Maduro representatives.

The court at that time determined that Maduro's government had so closely controlled Citgo that it functioned as an alter ego of the state. The decision pierced the corporate legal structure that normally protects such companies in the US from that exposure. Crystallex, now controlled by New York hedge fund Tenor Management, could seek shares of Citgo's holding company to satisfy an international award for mining interests expropriated under former president Hugo Chavez in 2011.

Has Venezuela changed?

The case proceeded on two tracks this summer.

The first considers whether circumstances have changed enough, as Guaido argues, to throw out the 2018 ruling. Though Venezuela has lost appeals of that decision, the judge could determine that enough has changed in Citgo's circumstances, as argued by Abrams, to render the original, proper decision now moot. US judge Leonard Stark asked why the case should go forward given the consequences that the government warned.

"It is not a malefactor cleaning up its act — it is a new sheriff in town," Venezuelan counsel Donald Virrelli said. "It is a new sovereign government asserting authority at considerable risk to its leaders in order to rescue the country from disaster and restore the rule of law."

Crystallex has pointed to the Guaido government's lack of control over any Venezuelan institutions outside the US. The opposition has no access to Citgo's revenue and cannot ship its gasoline to Venezuela because of US sanctions. The court must follow Trump's recognition of the Guaido government as the accepted representatives of Venezuela. But the court did not need to also ignore the reality of the opposition control, or further delay Crystallex's certified award to hope for conditions to change, Crystallex attorney Miguel Estrada said.

"Mr. Abrams may care intensely for the new, fledgling regime in Venezuela," Estrada said. "That is not a legal argument."

US judge Leonard Stark questioned arguments by Citgo and Venezuelan national oil company PdV that the companies were not in possession of the shares Crystallex sought and that arguments should shift to state law considerations. The attorney agreed with Stark that the parties had previously made the court aware that the "illegal Maduro regime" could have the shares in their possession, because they had not received any clear answers until Guaido appointed a new board.

"Why should Crystallex and the court have any confidence, based on the arguments you are making, that these shares are not really attached and are going to be transacted?" Stark asked.

How to sell

The second track would determine the appropriate way to sell shares of Citgo to satisfy the roughly $1bn remaining to be paid on the award. The court will address this at a future hearing after major disruptions from uncontrolled hold music halted the nearly three-hour proceeding twice.

Crystallex has sought a straightforward auction under Delaware law. Venezuela, Citgo and other creditors, including ConocoPhillips, have said such a proceeding could undervalue the refiner — leaving nothing left after satisfying the Crystallex debt. ConocoPhillips proposed a receivership, similar to US bankruptcy. Venezuela argues that if a sale must proceed, it should be carried out by PdV to ensure the highest possible value.

"Crystallex has no incentive to minimize the number of shares sold or respect the due process rights of others, including PdV," the national oil company said.

Such a sale would leave the legitimacy of the opposition government "severely eroded" if it took place with Maduro still in power, Abrams warned.

"Should these assets be advertised for public auction at this time, the Venezuelan people would seriously question the interim government ability to protect the nation's assets, thereby weakening it and US policy in Venezuela today," Abrams said.

Maduro has meanwhile moved to clip Guaido's remaining influence in Venezuela. Guaido's claim as interim president, recognized by dozens of western governments, relies on his leadership of the National Assembly. Venezuela's supreme court ratified a rival leadership in May, and a new Maduro-aligned electoral board was appointed last month. Opposition leaders have not decided whether to recognize or participate in elections under those circumstances later this year.


Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

03/02/25

US delays Mexico tariffs by a month: Update

US delays Mexico tariffs by a month: Update

Adds comments from press conference, White House response, historic context. Mexico City, 3 February (Argus) — The US has agreed to postpone the 4 February implementation of 25pc tariffs on Mexican goods by one month to allow more time for negotiations, President Claudia Sheinbaum said today. Under an agreement with the US, Mexico will immediately reinforce its border with the US with 10,000 national guard troops to limit drug trafficking into the US, with a specific focus on fentanyl, Sheinbaum posted on social media platform X. The US pledged to take stronger action to curb the flow of high-powered firearms into Mexico, she said. The pause will allow "Mexico time to demonstrate good results for the US people and our people" on key security concerns, Sheinbaum said. US president Donald Trump confirmed the tariff delay in a social media post, saying there would be negotiations in the coming weeks with Mexican officials and US secretary of state Marco Rubio, secretary of the treasury Scott Bessent and secretary of commerce Howard Lutnick. The White House praised Mexico's willingness to respond positively to the tariff threats, while characterizing the Canadian response as [a] misunderstanding. "The good news is that in our conversations over the weekend, one of the things we've noticed is that Mexicans are very, very serious about doing what President Trump said," White House National Economic Council director Kevin Hassett said in a broadcast interview. Canada had "misunderstood the plain language of the executive order and they're interpreting it as a trade war." Trump said this morning that he "looks forward to negotiations" with Sheinbaum to reach a deal between the countries. He is also talking to Canadian premier Justin Trudeau later today. The announcements today do not address Trump's complaints of a trade deficit with Mexico, which Sheinbaum said during a press conference today the US misinterprets as a negative. Both the US and Mexico benefit from the region becoming more competitive, she said. Mexico will also keep its retaliatory tariffs on the table: "We will save Plan B for later, if necessary," Sheinbaum said. The current tensions are similar to those from 2019, when Trump threatened to impose 5pc tariffs on all Mexican goods. He relented when former president Andres Manuel Lopez Obrador said Mexico would deploy 21,000 national guard troops to contain the flow of migrants toward the US. If the tariffs were implemented, it would disrupt the energy trade between the US and Mexico. Nearly all of Mexico's roughly 500,000 b/d of crude shipments to the US in January-November 2024 were waterborne cargoes sent to US Gulf coast refiners. Those shipments in the future could be diverted to Asia or Europe. Mexico also imports much of its road fuels and LPG from the US. But the country is unlikely to hit these goods with retaliatory tariffs, according to market sources. By Antonio Gozain and Cas Biekmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Ontario bans US companies from provincial contracts


03/02/25
03/02/25

Ontario bans US companies from provincial contracts

New York, 3 February (Argus) — Ontario's premier Doug Ford banned US companies from provincial contracts until President Donald Trump lifts his planned tariffs on Canada . "US-based businesses will now lose out on tens of billions of dollars in new revenues," Ford said on social media platform X today. "They only have President Donald Trump to blame." Ontario also plans to tear up the province's contract with Elon Musk's Starlink internet services as part of a retaliatory move following Trump's decision to impose tariffs. "Ontario won't do business with people hellbent on destroying our economy," Ford said. "Canada didn't start this fight with the US, but you better believe we're ready to win it." Canada announced a targeted list of counter-tariffs that will go into effect on 4 February. Ford has been particularly outspoken among Canada's provincial leaders , given the Ontario's close ties with the US auto industries and steel industries in particular. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

European products markets open higher on US tariffs


03/02/25
03/02/25

European products markets open higher on US tariffs

London, 3 February (Argus) — European light and middle distillate markets opened higher today after US tariffs against China, Mexico and Canada were announced over the weekend, but market participants reacted cautiously to the move. US president Donald Trump on 1 February slapped tariffs of 10pc on Canadian energy imports, which account for a significant share of foreign crude and products supply into the US. The tariff rate against Canada stood in contrast to the 25pc tariff applied to Mexico, which may be designed to mitigate the inflationary effect of costlier Canadian crude and products imports in the US market. Eurobob non-oxy gasoline barges were trading at a volume-weighted average of $728/t at 13:40 GMT, up from $715/t since the 31 January close, while underlying Ice February gasoil futures — the futures value against which diesel and jet cargoes are traded — was higher at $727/t, up from $711.25/t. Brent crude values were just 14¢/bl higher, as product cracks firmed by 19.1pc and 8.6pc to $10.37/bl and $20.43/bl against Brent futures for non-oxy barges and Ice gasoil futures, respectively. Any Canadian product sales into the US would see tariffs passed onto the buyer, according to one source with knowledge of the matter, adding they were waiting to see how Canada otherwise responds to the US tariffs. Canadian refiners could also start sending their product to west Africa or Latin America, another source close to the matter told Argus last week. This ‘wait-and-see' approach was echoed by one Mideast Gulf gasoline trader, while two European analysts said the desired policy outcome of rebalancing trade between the US and Canada was not straightforward, and may make Canadian products imports more affordable as the Canadian dollar depreciates. The US may be better prepared for a gasoline supply shock as a result of seasonal stockpiling, one analyst said, but the US Atlantic Coast has a more significant gasoline supply shortage than Canada if gasoline output were to remain in the domestic market north of the border, another said. In a sign of concerns over US Atlantic Coast diesel tightness, the Sebarok Spirit LR2 appeared to have been booked to deliver a mixed cargo of 10ppm diesel and gasoline from the Port of Antwerp to New York by 15 February, according to Kpler tracking data. These type of voyages "never happen", one analyst said, with Europe structurally short of diesel and the ARA hub a reliable diesel buyer of last resort. The vessel was still anchored at the Port of Antwerp today. In the event of lower Canadian crude deliveries to US refineries, US product cracks could strengthen, one analyst said, but added a halt in supplies of Western Canadian Select (WCS) to US refineries was unlikely. A strengthening in product cracks could exacerbate a seasonal improvement in Rbob gasoline premiums ahead of the summer driving season, the source said, while transatlantic diesel arbitrage economics could remain shut firmly for longer — closing off a key supplier from the European diesel market. It was not immediately clear how product flows from Canada to the US were otherwise impacted today, as most product exports into the US are made via pipeline. No new gasoline or diesel cargoes were recorded loading at Canadian ports signalling US delivery by Kpler today. Two vessels carrying clean products from Valero's 265,000 b/d Jean Gaulin refinery, Quebec, were sitting offshore northeast US signalling to discharge volume at New Haven, Connecticut on 5-6 February. By George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US delays Mexico tariffs by a month


03/02/25
03/02/25

US delays Mexico tariffs by a month

Mexico City, 3 February (Argus) — The US has agreed to postpone the implementation of 25pc tariffs on Mexican goods for one month, "allowing Mexico time to demonstrate good results for the US people and our people" on key security concerns, President Claudia Sheinbaum said today. Under the agreement Mexico will immediately reinforce its border with the US with 10,000 national guard troops to prevent drug trafficking into the US, with a specific focus on fentanyl, Sheinbaum posted on social media platform X following a conversation with President Donald Trump. The US pledged to take stronger action to curb the flow of high-powered firearms into Mexico, she said. US president Donald Trump confirmed the tariff delay in a social media post, saying there would be negotiations in the coming weeks with Mexican officials and US secretary of state Marco Rubio, secretary of the treasury Scott Bessent and secretary of commerce Howard Lutnick. The tariffs were originally set to take effect on 4 February. By Antonio Gozain Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Opec+ JMMC sees no need to expedite return of output


03/02/25
03/02/25

Opec+ JMMC sees no need to expedite return of output

Dubai, 3 February (Argus) — A key panel of Opec+ ministers today effectively gave its backing to the group's output policy, which would not see any production returned to market until at least April. It has not, for now at least, heeded US President Donald Trump's call for the producer group to "bring down the cost of oil," something it could only do by raising output. Opec+ members are scheduled to start unwinding 2.2mn b/d of voluntary crude production cuts starting in April over an 18-month period — a decision taken in December. At the time the Opec secretariat said this was "to support market stability," an implicit nod to the uncertain demand picture and projections of a looming supply surplus in 2025. There appears little chance of this being expedited by Trump's call, which he made within days of taking office in January. The ministerial panel today made no mention of a change to policy. The JMMC statement following the meeting once again put a large emphasis on the importance of member conformity with production targets. It stressed the need for members that have exceeded their targets to fully deliver on their pledges to compensate for past overproduction. The JMMC's remit is limited to making recommendations on policy, with actual policy decisions made at full meetings of the Opec+ group. One important outcome of the panel today relates to the composition of the Opec+ secondary sources, which provide monthly estimates on member production levels. Consultancy Rystad Energy and the US' Energy Information Administration (EIA) were replaced by data analytics firms Kpler, OilX and ESAI, effective 1 February. The other secondary sources are Argus , consultancy Wood Mackenzie, S&P Global Platts, IHS Markit and Energy Intelligence. The next JMMC meeting is scheduled for 5 April. By Nader Itayim and Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more