Oil Prices Rise After U.S. Sanctions Rosneft Unit
February 19 2020 - 10:37AM
Dow Jones News
By Anna Isaac
Oil prices climbed Wednesday as investors weighed the U.S.
sanctions imposed on a subsidiary of Russian-oil giant Rosneft.
Global benchmark Brent crude rose 1.3% to $58.15 a barrel. The
commodity is up 3.4% so far this month, and analysts said its rise
has been further supported by the new sanctions.
The move Tuesday by the U.S. will limit Rosneft's exporting
activity, analysts said, and could reduce the supply of oil to
Indian and Chinese refiners -- two of its Swiss-based trading arm's
most important customers.
Rosneft Trading SA, a subsidiary of Rosneft Oil Co., has been
receiving crude from Venezuela in lieu of payments for loans made
to the country's state oil company, Petróleos de Venezuela, SA, or
PdVSA, according to analysts.
A person answering the phone at Rosneft Trading in Switzerland
directed a request for comment to its parent company in Moscow. A
call to that office went unanswered on Wednesday.
PdVSA is already subject to U.S. sanctions, and the move against
Rosneft's trading subsidiary comes after a two-year pressure
campaign by the U.S. to funnel funds away from the regime of
Venezuela's President Nicolás Maduro.
"The United States is determined to prevent the looting of
Venezuela's oil assets by the corrupt Maduro regime," said U.S.
Treasury Secretary Steven Mnuchin on Tuesday. The U.S. is bidding
to replace Mr. Maduro and wants Juan Guaidó recognized as
Venezuela's legitimate leader.
The restrictions to the Geneva-based Rosneft Trading SA came
with a warning from the U.S. administration that anyone doing
business with the trading arm could be hit by further
sanctions.
"Venezuelan crude oil barrels were being sold by Rosneft
Trading, [which had been] picking up cargo for repayment of debt
and reselling it," said Helge Martinsen, senior oil analyst at DNB
Markets. "It helped get exports out of Venezuela flowing again.
Clearly, the U.S. saw that and wanted to clamp down on it."
Venezuelan gold has also been targeted by U.S. sanctions,
leading to elaborate efforts to evade detection of exports from the
country.
"The sanctions are on the Swiss company, not on the Russian
company, so there are a lot of loopholes. But counterparties will
have risk managers and others looking again at connections to
Rosneft," said Olivier Jakob, managing director at consulting firm
Petromatrix. "The message is if you're a trader and you have a role
in exporting Venezuelan oil, then the U.S. will come for you."
The U.S. has previously tried to dissuade Russia from its
support for Mr. Maduro, and President Trump is due to visit India
later this month, after the country recently signed a deal with
Rosneft.
"There may also be some larger, geopolitical power plays going
on here," Mr. Jakob said.
Write to Anna Isaac at anna.isaac@wsj.com
(END) Dow Jones Newswires
February 19, 2020 10:22 ET (15:22 GMT)
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