The last tankers that loaded sanctioned Venezuelan oil before the U.S. blockade and the ousting of Nicolas Maduro are set to arrive in China in the coming days in what would be the end of the Chinese imports of super cheap crude from Venezuela.
Two tankers carrying a total of 3.8 million barrels of Venezuelan crude, exported under Maduro, are currently en route east of the Cape of Good Hope, according to tanker-tracking data from Vortexa and Kpler, quoted by Bloomberg. These will likely carry the last sanctioned, and very cheap, Venezuelan crude supply to China.
About 24 million barrels of Venezuelan crude are currently held in floating storage offshore Malaysia and Singapore. The volumes have shrunk from nearly 30 million barrels earlier this month.
This supply, together with the last arriving illicit cargoes, could be the last very cheap supply to China’s independent refiners, the so-called teapots.
After these volumes are absorbed, probably in a month or two, Chinese refiners will have to pay international prices for crude from Venezuela, whose exports are now under the control of the United States. Treasury licenses to top oil trading houses to market Venezuelan oil mean that sales will be above board.
Vitol, the world’s biggest independent oil trading group, is offering Venezuelan crude to Chinese refiners at a discount that’s three times narrower compared to the illicit sales from Venezuela before Maduro’s ousting, anonymous traders with knowledge of the matter told Bloomberg earlier this week.
Vitol has recently offered cargoes of Venezuela’s flagship Merey heavy sour crude grade to China at a discount of $5 per barrel to ICE Brent, according to Bloomberg’s sources.
This compares with a discount as wide as $15 a barrel to ICE Brent on a delivered basis before the U.S. blitz in Venezuela and the capture of Maduro. Back then, China was the most important buyer of Venezuelan crude in exports that were under sanctions by the U.S. and were carried out by a shadow fleet of tankers.
By Tsvetana Paraskova for Oilprice.com
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