U.S. Sanctions Second Rosneft Trader of Venezuelan Crude, Complicating Supply Chain Logistics for Rosneft and Caracas
Russia’s state-owned oil major, Rosneft, has gained considerable influence over the Maduro regime by virtue of its role as the leading distributor of Venezuelan crude to international markets. In 2019, the Russian oil major lifted as much as two-thirds of the commodity to major energy markets, such as China and India. Tightening U.S. sanctions on Rosneft-affiliated traders of Venezuelan crude, however, is likely to have a significant effect on the supply chain challenges facing the Russian company and the Maduro regime.
On March 12, the U.S. sanctioned a second Rosneft trading affiliate, TNK Trading International S.A. (TTI), in connection with its brokering of Venezuelan crude oil in international markets. TNK Trading emerged as the Russian oil major’s primary trader of the commodity following the imposition of sanctions on Rosneft Trading S.A. (RTSA) in February 2020. With the latest measure, however, this is unlikely to remain the case. Rosneft took control of TNK Trading in December 2017. It is registered at the same address in Geneva as Rosneft Trading (along with other Rosneft-affiliated entities).
Companies, such as China’s Sinochem International Oil, and major traders have said that they will not import oil from Rosneft due to sanctions risk. Rosneft has also been forced to re-issue tenders for sale of 1.2 million tons of fuel from Russian ports, removing now-sanctioned RTSA as the seller. Combined with the ongoing oil price war between Russia and Saudi Arabia, these additional sanctions are expected to put tremendous pressure on both Rosneft and the Maduro regime – all amidst the country’s effort to confront the outbreak of COVID-19, which is emerging as a threat during the same window.