Venezuelan oil shipments to the United States have fallen to just 56 percent of their 2016 average, cargo-tracking data from Bloomberg has revealed, as sanctions against Caracas hinder oil sales from PDVSA.

Washington imposed a round of sanctions against the Venezuelan government this August, including a ban on dealings in new debt or equity issued by state oil firm Petroleos de Venezuela SA (PDVSA) or the government. Ever since, U.S. refiners have found it increasingly difficult to secure the letters of intent that are traditionally used to pay for crude cargoes. U.S. banks are simply getting more and more reluctant to conduct any business that includes the Venezuelan state oil company.

What’s worse, though, is that the quality of Venezuelan crude sent north is becoming worse. According to Bloomberg, one U.S. refiner said it rejected a Venezuelan oil cargo because it was mixed with four times more water than the admissible amount. The water content of oil cargoes is monitored closely because water-laced oil can damage refining equipment.

It’s not just water, either. Earlier this week, Reuters reported that PDVSA oil shipments are “soiled with high levels of water, salt or metals that can cause problems for refineries”. The problem is the lack of cash. Without it, PDVSA has had trouble buying the chemicals to treat its oil, and has had trouble scraping together enough cash to pay for equipment and upkeep to maintain the oil’s quality. “We’re refitting chemical injection points, recouping pumps and storage tanks,” one PDVSA worker told Reuters. “But without chemicals, we can’t do anything.”

Related: Can Venezuela Avoid Default?

Venezuela is the third-largest oil exporter to the United States. For the week to October 13, imports from the country averaged 255,000 bpd, down from 466,000 bpd in the previous week and from 736,000 bpd a year earlier, the Energy Information Administration reported.

When the Trump administration first started mulling over sanctions against Venezuela, suspending imports from the troubled country was an option. It was never used, but apparently it didn’t need to, judging by these latest developments. That’s one more headache for Caracas, which must make more than $2 billion in bond payments over the next week—payments that it can’t miss because it could otherwise trip the wire to bondholders just waiting for a default.

By Irina Slav for Oilprice.com

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