Background on Key Players
Vitol and Trafigura, two prominent global commodity traders, have initiated discussions with Indian and Chinese refineries to sell Venezolan oil for March deliveries, according to multiple industry sources. These traders recently reached agreements with the U.S. government to help market Venezuela’s stranded oil, following an accord by the interim Caracas government to export up to 50 million barrels of crude to the U.S.
Commercialization Efforts
The commercialization efforts by these traders will expedite the sale of Venezuelan oil under the U.S. program, enabling the OPEC producer to resume its paralyzed exports since Nicolás Maduro’s overthrow. Companies are rapidly securing vessels and moving swiftly to sell Venezuelan oil, with Trafigura’s CEO confirming that the company will load its first shipment to the U.S. this week.
Indian and Chinese Refineries
Vitol is approaching Indian state-owned refineries to sell the oil, according to two sources. The trader reportedly offered a cargo with a discount of between $8 to $8.50 per barrel off the Brent ICE, as per one source.
- Indian Oil Corp and Hindustan Petroleum Corp: Sources told Reuters last week that these refiners might consider purchasing Venezuelan oil. Neither company responded to requests for comment.
- Reliance Industries: The company stated it would reconsider crude purchases from Venezuela if U.S. regulations permit sales to non-U.S. buyers.
- PetroChina: Vitol and Trafigura have contacted PetroChina, exploring the refinery’s interest in Venezuelan oil. PetroChina was a significant buyer of Venezuela’s heavy Merey crude and fuel oil before U.S. sanctions began.
A source mentioned that traders might initially target major state-owned oil traders rather than independent refineries in China that typically buy cheap sanctioned oil.
PetroChina did not respond to a request for comment. Vitol declined to comment, while Trafigura stated they are providing logistical and marketing services to facilitate Venezuelan oil sales but declined to comment on the discussions.
March Deliveries
Another source reported that Vitol and Trafigura are offering cargoes for delivery in the second half of March.
- Vitol recently loaded the first shipment of gasoline from the U.S. to Venezuela on the Hellespont Protector, a Panamax vessel expected to arrive at Venezuela’s José port on January 28, according to Kpler shipping data.
- The gasoline is used to dilute Venezuela’s heavy crude and facilitate its transportation and processing.
The imminent resumption of Venezuelan oil exports has eased concerns over potential supply disruptions in Iran and curbed global oil futures’ rise.
Key Questions and Answers
- Who are Vitol and Trafigura? Vitol and Trafigura are two leading global commodity traders.
- Why are they selling Venezuelan oil? They aim to help market Venezuela’s stranded oil under a U.S. program, enabling the country to resume its paralyzed exports.
- Which refineries are involved? Indian and Chinese refineries, including Indian Oil Corp, Hindustan Petroleum Corp, and Reliance Industries, as well as PetroChina.
- When are the deliveries scheduled? For the second half of March.
- What is the significance of this development? It helps alleviate concerns over potential supply disruptions in Iran and curbs global oil futures’ rise.
