By Marianna Parraga and Bhargav Acharya
WASHINGTON, Feb 25 (Reuters) – The U.S. Treasury Department said on Wednesday it would authorize companies seeking licenses to resell Venezuelan oil to Cuba, according to guidance posted on the department’s website, a move that could help ease the island’s acute fuel scarcity.
Since Washington took control of Venezuela’s oil exports in early January in the aftermath of its capture of President Nicolas Maduro, the South American country’s supply to Cuba ceased, worsening its energy crisis.
Venezuela had been for more than 25 years the main supplier of crude and fuel to its political ally Cuba through a bilateral pact. Mexico, which had emerged as an alternate supplier, also has halted shipments to Cuba since a fuel cargo arrived in Havana in January, according to shipping data.
The new favorable license policy comes as large trading houses including Vitol and Trafigura handle the lion’s share of Venezuela’s oil exports, with millions of barrels exported to the U.S., Europe and India, and millions more barrels stored at Caribbean terminals for resale.
U.S. President Donald Trump has warned that Venezuela’s allies that were taking its oil as part of swaps, debt repayments and other agreements must now pay fair market prices for cargoes. These allies include China and Cuba.
The authorization comes as U.S. Secretary of State Marco Rubio arrived in the Caribbean on Wednesday to begin talks with leaders who have warned that Cuba’s growing humanitarian crisis could destabilize the region.
Even with the new policy, it is not clear whether Cuba can afford oil purchases without favorable terms. With Cuba struggling to pay for fuel imports on the spot market in recent years, any potential purchase from traders is expected to demand regular commercial terms such as bank guarantees and cash payments.
The Treasury’s guidance also makes clear that potential transactions must “support the Cuban people, including the private sector,” including exports for commercial and humanitarian use in Cuba, while transactions involving or benefiting the Cuban military or other government institutions would not be covered.
The Treasury Department said that applicants need not necessarily have an established U.S. entity, and limitations in a license granted in January to broadly export Venezuelan oil would not apply to Cuba.
(Reporting by Bhargav Acharya in Toronto, Marianna Parraga in Houston and Daphne Psaledakis in Washington; Editing by Costas Pitas and Matthew Lewis)
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