Washington’s recent sanctions against Venezuelan state-run oil company PDVSA have started to ensnare its U.S. unit, Citgo Petroleum, making it harder for the refiner to obtain the credit it needs to purchase crude, according to six traders and banking sources.
Fewer oil providers are willing to sell cargoes to Citgo on open credit,instead requiring prepayment or bank letters of credit to supply its 749,000-barrel-per-day refining network, the sources said.
Two sources at Canadian oil suppliers said their companies are no longer allowed to trade with Citgo directly, and have begun selling cargoes through third parties to avoid the credit risk.
Citgo’s three U.S, refineries, one each in Illinois, Texas and Louisiana, account for about 4 percent of domestic fuel capacity. They are major suppliers of gasoline, diesel and jet fuel. If financial troubles raise the cost of obtaining crude, its profits would be squeezed, making the company less competitive. …