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The transactions would help clear out domestic surplus but it could also mean US President Donald Trump would take reprisal as he has sanctions on both countries. Since April, Iran has shipped five tankers of about 1.5 million barrels to Venezuela’s government.
However, the country’s lack of fuel meant the demand was still not being met.
The Trump administration intends to halt Iran’s energy transactions and oust Venezuelan President Nicolas Maduro.
It has threatened action and cautioned ports, shipping firms and insurers not to aid the trade.
However, Iran plans to continue shipping, according to five trading and industry sources close to the Oil Ministry.
Two of the sources said Iran’s Revolutionary Guards military force, which is led by Supreme Leader Ayatollah Ali Khamenei, were laying out policy on Venezuela.
“This is a long-term strategic decision made by the state to expand influence,” said one Iranian trader familiar with the policy.
Requests for comment from Iran’s Revolutionary Guards and Oil Ministry, and from Venezuela’s state oil company PDVSA, Oil Ministry and Information Ministry, were not answered.
The United States would not stand for “meddling” or sanction-breaking to back Venezuela, but did not clarify what reprisals could be put in place, according to a State Department spokesman.
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“The international business community should already be aware of the legal risk of any transactions with the illegitimate and tyrannical regime of Nicolas Maduro,” he said.
“It is no surprise that the deeply corrupt and oppressive Iranian regime would find a kindred spirit with Mr Maduro’s brutal kleptocracy.”
Iran revealed is was self-sufficient last year with the third stage of its newly-built 350,000 barrels per day (bpd) Persian Gulf Star refinery in the port of Bandar Abbas.
However, the Covid-19 pandemic has slashed demand to almost 450,000 bpd in the first quarter of 2020 from about 650,000 last year, according to energy consultancy FGE.
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And before the pandemic, supply surplus had eached 84,000 bpd of gasoline in the last quarter of 2019, but it rose to 172,000 in the first three months of 2020, according to FGE.
Iran did not have enough storage capacity meaning it was not prepared for the glut, the trading and industry sources said.
Nicolas Maduro’s need for fuel was the perfect situation for Iran.
“Iran’s gasoline oversupply equals 15 to 20 medium cargoes every month,” said one of the sources.
“Iran exports only five cargoes a month to Asia and Africa. So Venezuela is the only viable option.”
The sources have asked to remain anonymous.
According to an estimation by oil industry data provider TankerTrackers.com, an Iranian cargo ship is currently on its way toward Venezuela.
The website also revealed the cargo ship contains refining equipment.
It comes after Iran shipped refining equipment to Venezuela through over a dozen flights by sanctioned airline Mahan Air earlier this year.
The ship is travelling west across the Atlantic Ocean after leaving from Iran’s Bandar Abbas – the same port where the gasoline cargoes departed from in May, according to Refinitiv Eikon data.
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