Chinese oil buyers have reduced their intake of Venezuelan oil as the discount between Brent and the country’s flagship Merey crude shrank from $15 per barrel last month to $13 per barrel, Bloomberg reported today, citing unnamed sources.
The price rise of Venezuelan oil follows the U.S. naval blockade that has disrupted tanker traffic to and from Venezuela, and that is not about to be lifted anytime soon, as stated earlier this week by Secretary of State Marco Rubio.
“We continue with that quarantine, and we expect to see that there will be changes, not just in the way the oil industry is run for the benefit of the people, but also so that they stop the drug trafficking,” the top official said.
The U.S. so-called oil quarantine has disrupted Venezuela’s oil industry to such an extent that PDVSA had to start shutting down wells because it ran out of storage space for the crude it was producing.
According to a Bloomberg report from late December, the Venezuelan state oil company was looking to shut in about 15% of Venezuela’s total oil production of around 1.1 million barrels per day by slashing Orinoco Belt output by 25% to about 500,000 bpd.
However, Reuters reported earlier this week that tankers are still leaving Venezuela loaded with crude and fuel oil to the tune of a total 12 million barrels, according to ship-tracking data, including from TankerTrackers.com. Per the report, the half a dozen vessels are sailing in so-called dark mode, without any flags or safety documentation. All of the tankers are under U.S. sanctions. Half of them are supertankers that usually transport crude oil from Venezuela to China, which has been the South American country’s biggest crude oil buyer.
Separately, Kpler reports that there are some 82 million barrels of crude oil, including from Venezuela, sitting on idling tankers off the coast of China and Malaysia that could provide an additional supply cushion to the world’s largest importer of the commodity.
By Irina Slav for Oilprice.com
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