Venezuela's Fuel Shortages Persist Despite Iran Deliveries

Long queues at gas stations around the country underscore Venezuela's continuing fuel shortages, despite Iran stepping in to help its Latin American ally with a major fuel shipment last month.

"Iranian petrol is an illusion that has lasted a month," driver Nestor Hernandez told AFP in Maracaibo, the country's second-largest city.

He said he still had to queue for hours at petrol stations in the city that once was Venezuela's booming oil capital, where long lines, sleepless nights and anxiety have now become the norm for those seeking fuel.

Despite enormous reserves, oil-producing Venezuela is experiencing a serious fuel shortage, exacerbated by the economic effects of the coronavirus pandemic.

"The gasoline never arrived," says Pedro Perales, a resident of Puerto Ordaz in the eastern state of Bolivar, which borders Brazil.

He said he spent two days straight, including the night, in his car waiting his turn to fill up with gas. Even then, he could only get half a tank, the quota per vehicle.

Up until 2018, Venezuela was sending 500,000 barrels per day to the United States alone, and received in return 120,000 bpd of light oil, diluents and fuel-producing supplies.

Sanctions, however, have forced Venezuela -- which used to refine enough oil for its own needs -- to turn to allies such as Iran to alleviate a desperate gasoline shortage.

Tehran duly sent five tankers in May, laden with 1.5 million barrels of fuel, additives, spare parts and other materials.

The situation improved initially at gas stations with dollarized prices in several regions, but it did not take long for kilometer-long (half a mile-long) queues to form again.

The exception is Caracas: service stations in the capital are functioning normally again after running dry in March, during the first weeks of the coronavirus lockdown.

The socialist government of President Nicolas Maduro increased fuel prices on June 1.

In a country where fuel has been practically free, a liter of high-octane gasoline rose to 50 cents, though subsidies have been maintained within strict consumption and registration limits.

The country is almost entirely dependent on oil exports for revenues, but production has fallen to roughly a quarter of its 2008 level as Venezuela enters its sixth year in recession.

Maduro's government blames the loss in production on US sanctions, including those levied against the state oil company PDVSA, but many analysts say the regime has failed to invest in or maintain infrastructure.

Venezuela's oil production, which reached 3.2 million barrels a day 12 years ago, is collapsing.

Analysts expect the monthly report of the Organization of Petroleum Exporting Countries (OPEC), due on Tuesday, to reflect a further drop after Venezuelan output fell below 600,000 bpd last month.

Its refining system has disintegrated along with production. With capacity to process 1.3 mpd, it was barely ticking over at 12 percent of its potential in the first quarter of 2020, according to industry sources.

Ezio Angelini, head of the Maracaibo Chamber of Commerce, said what's happening at the gas stations in his city "is the chronicle of a death foretold."

"We are going back to the queues," said Angelini. "We knew this would happen, because Venezuela is not producing gasoline or is producing very little."

The United States -- which maintains sanctions against Venezuela and its oil in an attempt to displace Maduro -- has challenged Iran's shipments, but Caracas and Tehran have said that they will continue.

The US Justice Department issued a warrant on July 2 to seize the cargoes of four tankers on their way to Venezuela, tying the shipments to Iran's Revolutionary Guards, which Washington calls a terror group.

Sustaining gasoline imports will be complicated, says economist Jose Manuel Puente, a professor at the Public Policy Center at the Institute of Higher Studies in Administration.

"There is no cash flow," he told AFP, because of the drop in vital oil exports, and at the same time, the pressure for sanctions will increase.