Biggest Iranian flotilla yet en route to Venezuela with fuel

NEW YORK • Iran is sending its biggest fleet yet of tankers to Venezuela in defiance of US sanctions to help the isolated nation weather a crippling fuel shortage, according to people with knowledge of the matter.

Some of the flotilla of about 10 Iranian vessels will also help export Venezuelan crude after discharging fuel, the people said, asking not to be named because the transaction is not public.

The Nicolas Maduro regime is widening its reliance on Iran as an ally of last resort after even Russia and China have avoided challenging Washington's ban on trade with Venezuela.

The country's fuel crunch follows decades of mismanagement, corruption and under-investment at state-owned Petroleos de Venezuela since the time of Mr Maduro's late mentor and predecessor, Mr Hugo Chavez.

The country that was once a top supplier of crude to the United States and boasted one of the lowest domestic petrol prices in the world now can barely produce any fuel.

The last Iranian fuel shipments, sent in early October on three vessels, are running out, threatening steeper nationwide shortages with hours-long queues at petrol stations.

The current fleet under sail is about double the size of the one that first startled international observers in May, crossing a Caribbean Sea patrolled by the US Navy, to be greeted by Mr Maduro himself upon arrival.

"We're watching what Iran is doing and making sure that other shippers, insurers, shipowners, ship captains realise they must stay away from that trade," Mr Elliott Abrams, the US special representative for Iran and Venezuela, said in September.

Several vessels that transported fuel to Venezuela earlier this year, including Forest, Fortune and Faxon, appear to be returning to the South American nation and turned off their satellite signals at least nine days ago, according to Bloomberg tanker-tracking data. The Zarif appeared to be transiting through the Strait of Hormuz, the data shows.

Turning off transponders is a commonly used method by ships hoping to avoid detection.

In other instances of Iranian aid to Venezuela, ship names were painted over and changed to obscure the vessel's registration.

The oil ministry in Teheran was not immediately available for comment during the Iranian weekend. Messages sent to several officials at PDVSA, as Venezuela's state oil company is known, also were not immediately answered.

In addition to importing fuel, Venezuela also needs to export enough crude oil to free up storage space and prevent field stoppages, a task made more difficult by the sanctions against Mr Maduro's regime.

Production at Venezuela's network of six refineries has gone into steady decline, with spills and accidents becoming routine.

Mr Maduro's government has increased pressure on the poorly maintained infrastructure to ensure output for local consumption.

Sanctions have made it difficult to import parts or hire contractors, and the Maduro regime is running out of cash.

Consequently, the two nations are also discussing ways for Iran to help Venezuela overhaul its Cardon refinery, the last fuel plant there to operate more or less regularly, people with knowledge of the situation said.

In 2018, Chinese oil companies also looked at helping Venezuela fix its refineries, but lost interest after a review of the installations, people familiar with those plans said.

BLOOMBERG