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Venezuela, one of Latin America's biggest oil producers, has an import problem that could shock the global market and send U.S. refiners on the hunt for replacement supplies.
Venezuela's crude production has been steadily declining as the oil-dependent state slogs through an economic crisis precipitated by years of government mismanagement and exacerbated by a prolonged oil price slump.
Now, a drop in critical energy imports has some analysts worried that state oil giant Petroleos de Venezuela, known as PDVSA, is struggling to fund its operations.
While Venezuela boasts the world's largest proven oil reserves, much of it is heavy crude that PDVSA must dilute before it's sold to customers. In recent months, the country's imports of dilutants like light crude have tanked, according to figures from ClipperData, a firm that tracks commodity shipments.
Venezuela's crude imports typically average about 100,000 barrels a day, but have fallen to about 40,000 barrels per day in recent months, according to the firm. Since the start of September, ClipperData hasn't recorded a single crude import into Curacao, a Caribbean Island north of Venezuela where PDVSA blends its heavy crude with lighter, foreign crude before exporting it.
"That's a huge red flag because then they're not importing crude to be able to blend," said Matt Smith, director of commodity research at ClipperData.
"Once those imports dry up, it indicates that their exports are going to dry up as well, and that's the capitulation point."
It's possible that PDVSA's falling imports are merely the logical result of its falling production, says Smith. If it's producing less heavy oil, it might simply need fewer barrels of light oil to blend.
But the drop might also signal that PDVSA is having trouble buying crude, Smith warned.
PDVSA could not immediately be reached for comment.
To be sure, there are signs of financial stress throughout the country's oil industry. U.S. sanctions also appear to be making it difficult for Venezuela to navigate the international financial system.
Banks have refused to issue letters of credit to PDVSA customers, leaving cargoes stranded. Some big refiners have reportedly canceled orders or demanded discounts because the oil PDVSA sent them didn't meet their standards. The company has been blocked from some export terminals over unpaid bills.
Venezuela's embattled President Nicolas Maduro announced this month the country would aim to restructure its debt. Venezuela and PDVSA have recently defaulted on hundreds of millions of dollars in interest payments and turned in key principal payments late.
The debt situation highlights PDVSA's limited ability to reinvest in its operations, which will further exacerbate its production problems as it puts off oilfield and equipment maintenance, said Agata Ciesielska, Latin America associate at risk consultancy Eurasia Group. The restructuring process also adds transaction costs for PDVSA that will squeeze its finances even further, she added.
The risk of a sudden drop in Venezuelan exports concerns Pulitzer Prize-winning oil analyst Daniel Yergin. He notes that PDVSA has lost a lot of its talent and capabilities as skilled workers flee food shortages and runaway inflation.
"Venezuela is an important producer," Yergin, vice chairman at IHS Markit, told CNBC this week. "It seems on the verge of turmoil. If it really moved into turmoil and you lost oil from Venezuela, that would be a shock to the market."
The United States is likely to turn to Canada to make up for any shortfall in Venezuelan shipments, according to Yergin. U.S. Gulf Coast refiners, who run sophisticated plants capable of processing heavy crude, are major buyers of Venezuelan oil.
Citgo, PDVSA's Houston-based refining business, employees about 4,000 people at three refineries Texas, Louisiana and Illinois, according to its website.
Andrew Lipow, president of Lipw Oil Associates, says American refiners would not have trouble replacing Venezuelan supplies. He believes they can turn to Middle East producers like Iraq and Kuwait.
Still, an accelerated drop in Venezuela's exports would have a worldwide effect on the refining sector, he said.
Venezuela sends much of its crude to China and India to repay oil-for-loan deals. That means Asian and U.S. refiners would be searching for replacement supplies at the same time, Lipow said.
The situation could be a net positive for Venezuela's fellow OPEC members and other oil-producing nations, who have also seen their finances squeezed by three years of suppressed oil prices.
"As Venezuelan product continues to decline and world oil demand continues to grow, the market is getting better in balance, supporting prices and helping the remaining OPEC and non-OPEC producers at the expense of Venezuela," Lipow told CNBC.