Venezula is set to increase oil exports amid slump in output

Oil exports are expected to reach a four-month high of 325,000 barrels a day in August

Handout picture released by the Venezuelan Presidency showing Venezuela's President Nicolas Maduro speaking during a televised message announcing new arrests related to an alleged failed bid to topple him, at Miraflores Presidential Palace in Caracas on May 9, 2020, during the novel coronavirus, COVID-19, pandemic. Venezuelan military said it had thwarted an attempted invasion by mercenaries in the early hours of May 3. Maduro has accused US President Donald Trump of being behind the alleged invasion while Trump has roundly rejected the accusation, telling Fox News on May 8: "If I wanted to go into Venezuela I wouldn't make a secret about it." - RESTRICTED TO EDITORIAL USE - MANDATORY CREDIT "AFP PHOTO / VENEZUELA'S PRESIDENCY / MARCELO GARCIA" - NO MARKETING - NO ADVERTISING CAMPAIGNS - DISTRIBUTED AS A SERVICE TO CLIENTS
 / AFP / Venezuelan Presidency / Marcelo GARCIA / RESTRICTED TO EDITORIAL USE - MANDATORY CREDIT "AFP PHOTO / VENEZUELA'S PRESIDENCY / MARCELO GARCIA" - NO MARKETING - NO ADVERTISING CAMPAIGNS - DISTRIBUTED AS A SERVICE TO CLIENTS
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Venezuela’s long-suffering oil industry is ramping up exports even as production continues its inexorable slide.

Exports of crude oil, the commodity that bankrolls the regime of President Nicolas Maduro, are set to reach a four-month high of at least 325,000 barrels a day in August, largely because of diesel-for-crude swaps that up until now have been exempt from US sanctions.

At the same time, output slumped to about 101,000 barrels a day in the week ending August 5, according to a report seen by Bloomberg. That’s a far cry from just three years ago when Venezuela was churning out 2 million barrels on a daily basis.

Caracas can boost exports even when output is falling thanks to oil kept in storage. Tanks at the main port of Jose and oil-processing facilities known as upgraders are holding an average of 15.6 million barrels this month, the equivalent of 48 days of exports. That’s up by almost half compared with levels seen in January, according to PDVSA internal reports compiled by Bloomberg.

Inventories have risen because of a pandemic-induced drop in demand for fuels. The bankruptcy and subsequent sanctions imposed on Mexican trading oil companies Libre Abordoand and its subsidiary Schlager Business Group, which helped the regime place 32 million barrels of crude oil in Asia, have also played a part.

The bulk of Venezuelan exports this month, as estimated by shipping reports and ship-tracking data, are going to meet diesel swaps with refiners including Mumbai-based Reliance Industries, Spain’s Repsol and Eni of Italy.

China, which used to be the biggest buyer of oil from the Latin American nation, is expected to receive 54,800 barrels a day, the lowest in around three years.

Lower supplies from Venezuela and Iran, both hit by US sanctions, together with restrained output from the Organisation of Petroleum Exporting Countries and its partners are helping to keep the differentials of heavy and light oil tight.