Sanctions on Venezuela's oil firm sends U.S. refiners scrambling

(Reuters) - Venezuela’s revenues from oil sales to the United States have come under severe threat as sweeping sanctions on Venezuelan state-owned oil firm has sent U.S. buyers scrambling for replacements.

FILE PHOTO: An oil tanker is seen in the sea outside the Puerto La Cruz oil refinery in Puerto La Cruz, Venezuela July 19, 2018. REUTERS/Alexandra Ulmer/File Photo

The United States on Monday imposed sanctions on Petróleos de Venezuela, S.A., known as PDVSA, to cripple the OPEC member’s oil shipments, which account for nearly all of Venezuela’s exports, in response to the reelection of socialist President Nicolas Maduro, a vote widely viewed as fraudulent.

Washington has recognized opposition leader Juan Guaido as Venezuela’s head of state.

U.S. refineries that depend on Venezuela’s heavy crude are turning to domestic sour crude grades to offset the impact, sending prices to the strongest in about five years, traders said. Other potential alternatives from Canada, Mexico or elsewhere in Latin America are hard to secure amid slowing production, limited spare capacity and transportation bottlenecks, traders said.

Broader oil futures prices found some support on news of sanctions but the market reaction was largely muted as a lack of investment, mismanagement and fleeing workers have already driven the OPEC-member’s oil production to the lowest in almost seven decades.

PDVSA is seeking to sidestep Trump administration sanctions restricting payments for its oil by a....

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