An oil tanker loaded with about one million barrels of Venezuelan crude has been stranded for more than a month off the coast of the US state of Louisiana because it lacks the letter of credit (L/C) required to discharge its cargo.

Banks are cutting exposure to Venezuela as a result of political upheaval there while some financial institutions have refused to provide correspondent banking services for the South American country in response to US sanctions imposed on it.

L/C difficulties

The would be buyer of the shipment, refiner PBF Energy Inc, has been unsuccessful in attempts to find a bank willing to provide the L/C required to discharge the oil according to industry sources.

It was not immediately clear which banks have denied L/Cs or if other US refiners are experiencing similar difficulties.

Dwindling exports

The tanker Karvounis is anchored at South West Pass off the coast of Louisiana and the stranded cargo adds to financial difficulties faced by Petroleos de Venezuela S A.

Revenue from the state-run oil company oil sales has been diminished by low prices and declining production. More than 90 per cent of Venezuela's export earnings derive from oil revenues.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.