Chinese Teapots Hold Off Venezuelan Crude Buying Amid Price Discrepancies

Chinese independent refiners are holding off on making new purchases of Venezuelan oil due to discrepancies in offered prices following the US’ relaxation on the country’s sanctions, trading sources told Reuters.

• Since mid-October large oil players such as Vitol, Gunvor and Trafigura have gradually resumed purchases of Venezuelan oil, pushing prices higher.
• Venezuelan sellers and Chinese buyers are now struggling to agree on prices, as large discounts seen in the previous years eroded, sources told Reuters. Chinese buying has also slowed due to low seasonal demand for asphalt - a key product made from Venezuela's heavy crude. "The market is in disarray," said a manager at a Chinese independent refinery.
• Offers for Venezuelan cargoes arriving in China in early 2024 are coming in with discounts of $9-19/bbl to ICE Brent, an unusually wide range. When it was sanctioned, Venezuelan crude traded at about $20/bbl below ICE Brent on a DES basis in China for October delivery, the sources added.
• The refiners are also waiting to see what state-owned PetroChina as the firm said previously it seeks to buy up to 8mn barrels per month of Venezuelan crude from PDVSA.
• "Buyers are staying put despite expectations of higher prices and tighter supply, as they are waiting to see if and when PetroChina will come back to the market," the refinery manager said.
• Venezuela’s deputy oil minister said this week the country’s oil output has risen to 850kbpd currently and is planned to increase to 1mbpd soon.