Chinese buyers shunned offers for Venezuelan crude this week, as a US blockade on the South American producer constrains exports and pushes up prices.
Venezuela’s Merey crude was offered at a discount of $13 a barrel to ICE Brent, said people familiar with the matter, who asked not to be identified because the information is not public. That compares with a discount of as much as $15 a month ago, prior to the US campaign on sanctioned tankers.
Loadings of Venezuelan oil destined for China tumbled last month as the naval blockade ramped up, according to data compiled by Bloomberg. Sellers have hiked Merey offers due to the shipping disruptions, the people said.
China is the biggest buyer of Venezuelan oil, and Merey is often used to make bitumen to pave roads in the Asian nation. A softer construction outlook and ample crude supplies held by refiners is offering a buffer, allowing buyers to sit on the sidelines and wait for better priced deals.
There’s also a growing hoard of sanctioned oil in floating storage that will cushion Chinese buyers if US action against Venezuela significantly chokes off flows. Almost 82 million barrels — including Venezuelan — are on tankers off China and Malaysia, according to data intelligence firm Kpler.
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