Venezuelan military keeps tight grip on Iranian fuel

Venezuela's military is keeping a firm grip on the first cargo of Iranian gasoline and blendstock that arrived over the weekend, with a second of at least five shipments not far behind.

The Fortune is expected to complete unloading around 280,000 bl tomorrow at Berth 4 of El Palito, from where the desperately needed fuel will be distributed in a tightly rationed system.

Some of the gasoline will be transported by pipeline to Yaracuy and Lara states for tanker truck distribution in Barquisimeto and San Felipe and to nearby states Barinas, Cojedes and Portuguesa. Venezuela's state-owned PdV could cabotage part of the fuel from El Palito to Bajo Grande on Lake Maracaibo, Carenero near Caracas and Guaraguao in Anzoategui state.

Incoming cargoes aboard the Forest, Petunia, Faxon and Clavel could be directed straight to other terminals, including Amuay and Cardon on the Paraguana peninsula where Iran is also helping PdV to repair its refining system.

In addition, part of the supply could be transshipped to Cuba, Venezuela's close political ally and a steady recipient of Venezuelan oil.

Even if all of the Iranian fuel stays in Venezuela, all five cargoes hold a total of around 1.5mn bl, which is estimated to last no more than three weeks at current levels of suppressed consumption driven by the rationing and Covid-19 pandemic restrictions.

Retail sales to essential drivers such as medical personnel are limited to a maximum of 20 liters per week for cars and up to 30 liters for food distributors. Pump prices, that have long exceeded no more than a penny per liter, are now running at $2-$3/liter.

Army and national guard personnel "supervise and control" tanker truck deliveries and retail distribution to government-designated "essential" drivers that officially include food and water distributors, health care workers and security services, a defense ministry official tells Argus. But the government's "first priority" is security personnel including the army's needs.

The military is a key pillar of support for the US-sanctioned government of President Nicolas Maduro, who faces frequent protests over shortages of food, water, electricity and gasoline.

Maduro and his new oil minister Tareck El Aissami celebrated the arrival of the Iranian fuel, which they say is vital to replenishing the local market choked off by US sanctions.

The shipments have sparked an uproar in Venezuela's US-backed political opposition, which alleges that the Maduro government's years of neglect, mismanagement and corruption have crippled PdV refineries. Maduro intends to "import a Middle East conflict" into Latin America and foment "terrorism", according to Carlos Vecchio, the US envoy representing a Western-recognized interim authority headed by National Assembly speaker Juan Guaido.

Venezuela and Iran "have the right to trade freely...to exchange products, buy and sell with all the people of the world, we have economic freedom and freedom of navigation," Maduro said.

Iran's government, which is also the target of US sanctions, repeatedly warned the US against intercepting the tankers. The US has expressed "concern" about Venezuela's cooperation with Iran, but US military patrols engaged in a Caribbean anti-narcotics campaign near Venezuela have steered clear of the oil supply.