CARACAS (Dispatches) -- Venezuela’s state-run oil company PDVSA has begun loading an Iran-flagged large tanker with Venezuelan heavy crude for export, news agencies say, as ties have deepened between the two OPEC nations.
Venezuela and Iran are under sanctions imposed by the United States, hurting their oil industries and hitting crude exports by shrinking the pool of customers and shipping companies willing to send vessels to their ports.
Washington has sought to disrupt the deepening bilateral trade between the two countries.
But the Iranian-flagged very large crude carrier (VLCC) arrived in Venezuela’s main oil port of Jose this month carrying 2.1 million barrels of Iranian condensate to be used as diluent for Venezuela’s extra heavy oil production, according to company documents.
The tanker is now due to transport up to 2 million barrels of Venezuela’s heavy Merey 16 crude on its way back, in a sale agreed by PDVSA and the state-owned National Iranian Oil Company (NIOC), Reuters reported Tuesda.
Its sailing date and destination have not yet been scheduled, but Bloomberg said the cargo is expected to be sold in Asia, the main destination of Venezuelan crude.
Three Iranian tankers - the Fortune, Faxon and Forest - are also crossing the Atlantic Ocean on their way to Venezuela, according to the Eikon data, carrying gasoline to help ease an acute scarcity that has kept Venezuelans lining up in front of gas stations waiting for fuel.
The same vessels and two additional Iranian tankers delivered gasoline and other fuel to PDVSA between May and June, while the South American nation shipped a cargo vessel carrying alumina to Iran’s Bandar Abbas port.
Last month, the U.S. government went on a full-throttle propaganda campaign, claiming that it had seized 1.116 million barrels of Iranian fuel because it was bound for Venezuela.
Iran, however, asserted that neither the ships were Iranian nor their owners or their cargo had any connection to the Islamic Republic.
A legal challenge put up by the owners of the cargoes in the U.S. early this month showed Iran was right.
In June, Iran also sent a cargo of food to Venezuela to supply the South American nation’s first Iranian supermarket.
Covering an area of 20,000 square meters, the store is selling more than 2,500 Iranian items including foodstuff, clothing, detergents, plastic, disposable products, nuts, and even tractors.
The store ushered in a new era of cooperation between Caracas and Tehran, hailed by political observers as a step in breaking the paradigm of US power to subjugate sovereign countries.
Venezuela Emulating Iran’s Resistance
Leading American magazine Foreign Policy said last week the U.S. "maximum pressure has not destroyed the Iranian economy, and Tehran is now sharing its lessons in resilience” with the beleaguered Venezuelan government.
Since Iran came under broad economic sanctions in the mid-2000s, Iranian policymakers have repeatedly asserted that the country would respond by adopting a "resistance economy” which would aim to reduce dependency on imports and Western investment.
"The simple fact that Iran, which has faced a broad campaign of sanctions for more than a decade, has recently come to the aid of Venezuela, which has been under concerted sanctions pressure for only a few years, suggests a remarkable degree of economic resilience. When comparing the two economies, the most salient question is not whether Iran will become like Venezuela, but rather whether Venezuela will become more like Iran,” the U.S. publication said.
Foreign Policy touched on Iran’s economy in the aftermath of the U.S. sanctions, including in the year leading up to March 2020, during which it generated $41.3 billion of export revenue from nonoil goods. Around half of this total was from manufactured goods, it noted.
In the same period, Iran’s oil exports totaled just $9 billion, marking a historic moment in its modern economic history where the country’s industrial sector, which employs around one-third of the labor force, earned double the export revenue generated by the country’s oil sector.
"Remarkably, Iran managed to grow nonoil exports during a period in which it was subject to U.S. secondary sanctions for all but two years. One of the major consequences of sanctions pressure, the steep devaluation of the rial, actually served to make Iranian exports more competitive abroad,” it said.
The development of the Iranian private sector in the first decade of the millennium—encompassing improvements in the quality and efficiency of manufacturing as well as the capture of local market share—led to a larger number of manufacturing firms eyeing export potential, the magazine said.
From March 2019 to March 2020, China was the top destination for nonoil exports, with Iraq, the United Arab Emirates, Turkey, and Afghanistan rounding out the top five destinations, it added.
But Iranian policymakers are already indicating that their response will be to double down on a longstanding feature of Iranian economic policy under pressure: the "search for beneficial opportunities for engagement with the international economy.”
"Iran’s recent outreach to Venezuela, with the new spectacle of Iranian exports for sale on supermarket shelves in Caracas, is the latest example of this opportunistic approach to international engagement,” Foreign Policy wrote.
On Tuesday, Venezuela pledged to continue trade with Iran after the U.S. announced new sanctions on Iranian officials and entities as well as President Nicolas Maduro.
The Venezuelan foreign ministry said "no intimidating and arrogant action by the U.S. government will prevent it from exercising its sovereign right to establish economic and commercial relations freely with the Islamic Republic of Iran and with any State.”