US Oil Blockade on Cuba Hits Private Sector Businesses

The United States imposed an oil blockade on Cuba in late January. Since then, power outages have lengthened and fuel shortages have intensified across the island. Havana business owners say the measures have sharply raised operating costs for small private firms.

Miguel Salva, 46, owner of Oishi food booth in Havana’s Pabellon Cuba exhibition venue, said the fuel crisis has been a nightmare. His former restaurant in the Regla municipality had relied on a backup generator. Petrol prices rose from about $1 a litre earlier this year to $10 on the black market after the government cancelled diesel sales in February and began rationing petrol.

“I had to close the restaurant,” Salva said. ” Across from Oishi’s booth, Pincharte operates as an itinerant food vendor hauling ovens and freezers in diesel trucks between fairs. Co-owner Elianis Aguero, 31, said expenses have increased eightfold. “Right now, no business is profitable if you depend on fuel,” Aguero stated.

Both businesses plan to shift toward renewable energy this year by purchasing solar panels and electric vehicles. Demand for electric tricycles has pushed their price up by 50 percent.

Eric Almeida, 41, president of Quota consulting company, said the oil blockade affects Cuba’s entire private sector, including logistics, marketing, exports, imports and productive capacity. The cost to truck a container from the port to Havana has risen from $100-$150 to at least $600.

That increase raises final prices for customers and slows commercial processes. Quota has lost clients who cut non-essential spending or closed operations. Almeida said the company has reorganised to survive. He estimates net income this year will fall 50 to 60 percent from pre-crisis forecasts.

In the past three months the Cuban government has issued new regulations offering greater opportunities to the private sector. These include expanded tax exemptions for importing solar panels, permission for Cubans living abroad to open small and medium-sized enterprises on the island, and relaxed rules allowing private investment in agricultural product distribution chains.

In March the government enacted a law authorising mixed limited liability companies. The measure permits private capital to merge with state companies for the first time in sectors such as sugar and precious mineral mining. Health, education and the military remain excluded.

Cuba’s private sector began developing in the 2010s and gained momentum in 2021 when the government authorised smaller-scale businesses amid an economic crisis intensified by U.S. sanctions and the COVID-19 pandemic. There are now about 10,000 active SMEs.

According to a September report by Cuban economist Ricardo Torres Perez citing official data, the private sector contributes 15 percent of GDP, 31.2 percent of national employment, 55 percent of retail sales and 23 percent of state tax revenues.

6 the Cuban government allowed private companies to import fuel, a function previously reserved for the state. Weeks later the US Bureau of Industry and Security authorised exports of U.S. oil and gas products to eligible Cuban private entities. Argelio Abad, first deputy minister of energy and mines, said on March 20 that some private entrepreneurs have imported fuel for their businesses and partial resale, but quantities remain minimal.

Between February and March the private sector imported roughly 30,000 barrels of fuel from the United States, according to Reuters. Cuba requires about 100,000 barrels per day for its grid and transport needs but produces only 40 percent of that volume.

Essential services rely on state fuel supplies. Almeida noted that importing one 25,000-litre tank costs between $45,000 and $50,000 plus 13 percent in commissions to state entities.