China Refiners Retreat from Venezuelan Oil Amid Rising Prices and U.S. Sanctions
Venezuela's Merey crude, once a bargain at $15 below Brent, now trades at a diminished $13 discount. The narrowing spread has sent shockwaves through China's refining sector, the primary buyer of Venezuelan oil. Bloomberg data reveals a stark drop in crude loadings to China last month as U.S. naval blockades tighten supply chains.
Shipping sanctions have transformed mere logistical hurdles into cost-prohibitive barriers. Elevated transport fees now cascade down to buyers, prompting Chinese refiners to retreat. With bitumen demand waning amid China's construction slump and storage tanks brimming, processors see little urgency to engage at current prices.
A floating insurance policy lies anchored offshore—Kpler reports 82 million barrels of sanctioned oil, including Venezuelan cargoes, idling NEAR China and Malaysia. This strategic reserve stands ready should Washington escalate pressure. The supply crunch transcends economics, intersecting with geopolitics following Nicolás Maduro's recent detention in a U.S. operation.
