Recent sanctions imposed by Washington on Venezuelan state-run oil company Petroleos de Venezuela S A (PDVSA) have started to affect its US refining unit, Citgo Petroleum.

Some suppliers are now insisting on letter of credit (L/C) payments, but banks in the US are becoming less willing to provide L/Cs or other banking services for Citgo transactions.

L/C or prepayment

Citgo is finding it harder to obtain the credit it needs to purchase crude according to traders and banking sources.

They say that suppliers that previously sold crude to the refiner on an open account basis are now insisting on L/C or prepayment terms.

Banks reluctant

But banks are increasingly reluctant to open L/Cs for transactions involving entities named as or connected to individuals or firms proscribed in the most recently introduced sanctions on Venezuela.

Earlier this month it emerged that a US company, PBF Energy, had made several unsuccessful attempts to find a bank willing to provide the L/C required to discharge Venezuelan oil from its tanker (DC World News, 4 September 2017).

Historically, the largest US buyers of Venezuelan heavy crude include PBF Energy and Citgo, as well as Valero Energy, Phillips 66 and Chevron.

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