Venezuela, like Iran, seeks OPEC support in face of US sanctions

London/Caracas (Platts)--8 Jun 2018 819 am EDT/1219 GMT

Venezuela has asked its OPEC counterparts for support from the effects of US sanctions that have hobbled the country's already reeling oil sector.

In a letter sent to the other 13 countries, Venezuelan oil minister Manuel Quevedo said OPEC should discuss at its June 22 meeting in Vienna the "extraordinary aggression" of US sanctions, according to OPEC sources familiar with the matter.

"I kindly request solidarity and support from our fellow members," Quevedo wrote.

The letter was similar to one sent last week by Iranian oil minister Bijan Zanganeh to the organization, protesting that some members were discussing raising their output at the expense of others. Iran, like Venezuela, is hit by US sanctions that target its crude sector, though those measures do not go into effect until November 5.

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Saudi Arabia, Kuwait and the UAE are the only members with significant spare capacity and the political conditions to tap it. Saudi energy minister Khalid al-Falih in recent weeks has suggested OPEC may ease its quotas to head off any supply shortages caused by further declines in Venezuelan output and shut-ins to Iranian production due to US sanctions.

Recent rising oil prices have also drawn the ire of the US, a key Saudi ally, while Russia, the major non-OPEC partner in its production cuts, has also indicated it would like to increase output.

OPEC is committed along with 10 non-OPEC producers to a 1.8 million b/d supply cut that is scheduled to run through the end of the year, but is up for review at the Vienna meeting.

Venezuelan oil ministry officials did not respond to messages, and several OPEC sources declined to comment but acknowledged that the letter was received.

Bloomberg first reported the letter late Thursday.

The US sanctions against Venezuela include restrictions on state oil company PDVSA's ability to finance new debt, worsening its production outlook, and the US has threatened further penalties in the wake of Venezuela's recent presidential election, which many international observers have labeled unfair.

Venezuela produced 1.36 million b/d in May, according to the latest S&P Global Platts OPEC survey, a 910,000 b/d decline in two years.

--Herman Wang,
--Mery Mogollon,
--Nick Coleman,
--Edited by Jonathan Fox,

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